Ramp-up mechanics, portfolio performance tests and enforcement sequencing
Discussion draft | 17 August 2026
Context | Phase 1
A sub-100 book is extremely sensitive and can trigger drawstops during the critical scaling period
Minimum equal-sized contracts required to breach the 5 August draft Phase 1 limits, compared with the proposed normalized severe trigger.
Phase 1 test
10 contracts
30
50
75
100
PAR30 Breach above 10%
2
4
6
8
11
PAR60 Breach above 7%
1
3
4
6
8
Collection Ratio Breach below 85%
2
5
8
12
16
Normalized PAR30 Breach above 10% of 100-contract reference
11
11
11
11
11
Normalized PAR60 Breach above 7% of 100-contract reference
8
8
8
8
8
Severe portfolio protection: a Phase 1 drawstop requires 11 equal-sized PAR30 contracts or eight PAR60 contracts. AMWAL can stop drawings for genuine distress while the Borrowing Base continues to use the actual pool.
Assumptions: equal outstanding principal and equal scheduled collections; each missed collection is a full scheduled instalment. Unequal exposures can breach sooner.
Proposal 1 | First 100 contracts
Through contract 100, only severe size-adjusted deterioration should stop drawings
Issue
Signed TS (9 Apr)
5 Aug draft
Sooner proposal
Rationale
AMWAL protection
Phase 1 hard tests
PAR30 10%; PAR60 7%; Collection 6.6% of opening gross book value. Tested monthly and on drawdown.
PAR30 10%; PAR60 7%; Collection [85]%; Cumulative Default 6.6%; Default Ratio blank. All apply from day one.
Live data access and formal quarterly reporting. Normalized PAR30 above 10% or PAR60 above 7% creates a Phase 1 drawstop.
Both triggers converge to the signed thresholds at 100 contracts without allowing one loan to stop scaling.
Live integration, actual-pool Borrowing Base and severe-stress drawstops remain.
Default Ratio
Not included.
New monthly flow test; threshold blank.
Report through contract 100; then 5% on a rolling 3-month flow test, formally tested quarterly.
New defaults are lumpy in a small denominator.
Live integration and the Borrowing Base retain early control.
Cumulative Default
Not included.
New lifetime test; thresholds not agreed.
Report through contract 100; then 8% for both later phases, formally tested quarterly. Deduct recoveries from the original default date.
A net lifetime ratio avoids ignoring cash recovered after default.
Gross defaults and recoveries remain separately visible.
Borrowing Base cut-off
Excludes delinquent receivables; no day threshold is specified.
Receivable removed after more than 60 days late; calculated at each draw and every second month.
Use the 60-day cut-off and retain that calculation cadence.
Align collateral reduction with serious delinquency, not a short delay.
PAR is still reported; defaulted receivables remain excluded.
Phase 1 normalized PAR: each PAR numerator ÷ the greater of actual eligible pool OPB and an agreed 100-contract reference pool OPB. Drawstop above 10% for PAR30 or 7% for PAR60. At equal sizes, 11 PAR30 or eight PAR60 contracts trigger; the reference denominator never changes the Borrowing Base.
Sources: signed Term Sheet dated 9 April 2026; 5 August Master Murabaha draft.
Proposal 2 | Delinquency
Both PAR30 and PAR60 can stop drawings; default requires persistence
AMWAL has live portfolio access. Formal PAR reporting is quarterly; the first PAR30 or PAR60 hard breach stops drawings and Event of Default follows only after two consecutive quarterly periods.
Issue
Signed TS (9 Apr)
5 Aug draft
Sooner proposal
Rationale
AMWAL protection
PAR30
10% / 8% / 6%; tested monthly and on drawdown. Drawstop first; Event of Default after 3 consecutive monthly test periods.
10% / 8% / 6% across the three phases.
Normalized 10% trigger through 100; 8% hard at 101-300; 6% hard at 301+. Formal quarterly test; Event of Default after 2 consecutive periods.
Detects earlier deterioration; normalization removes single-loan noise at low scale.
First hard breach stops drawings; live integration provides continuous visibility.
PAR60
7% / 6% / 5%; tested monthly and on drawdown. Drawstop first; Event of Default after 3 consecutive monthly test periods.
7% / 6% / 5%; Event of Default after 2 consecutive periods.
Normalized 7% trigger through 100; 6% hard at 101-300; 5% hard at 301+. Formal quarterly test; Event of Default after 2 consecutive periods.
Protects the critical scaling period, then converges to the mature-book thresholds.
First hard breach stops drawings; live integration provides continuous visibility.
Consequence: under 100 contracts, normalized PAR30 or PAR60 can create a ratio-based drawstop. From contract 101, either applicable PAR threshold creates drawstop on first formal breach and Event of Default after two consecutive quarters.
Sources: signed Term Sheet dated 9 April 2026; 5 August Master Murabaha draft.
Proposal 3 | Cash and default performance
Calculate continuously, but formally test quarterly over rolling periods
Issue
Signed TS (9 Apr)
5 Aug draft
Sooner proposal
Rationale
AMWAL protection
Collection Ratio
6.6% / 6.8% / 7.0%; collections divided by opening gross book value for the most recent fiscal quarter.
Bracketed 85% / 90% / 92.5% against monthly scheduled cash; not agreed.
Keep the scheduled-cash definition. Use a rolling 3-month weighted ratio, credit cash received within 15 days and formally test quarterly.
Collections cluster near month-end; many short delays cure within 15 days.
Live integration preserves visibility between formal tests.
Default Ratio
Not included.
New monthly flow test; threshold blank.
Report through contract 100; then 5% on a rolling 3-month flow test, formally tested quarterly.
A single-month flow test is unstable at low scale.
Live integration; Borrowing Base acts at 60 days and default at 90.
Cumulative Default
Not included.
New lifetime test; threshold not agreed.
Report through contract 100; then 8% at 101-300 and 301+, formally tested quarterly. Reduce the numerator for any recovery, including partial recovery, from the original default date.
Measures net loss experience rather than ignoring cash recovered after default.
Rolling Collection RatioCash received for the last three scheduled months ÷ scheduled cash for those months. Payments within 15 days count toward their scheduled month; months are weighted by scheduled cash, not averaged equally.
Rolling Default RatioNew-default OPB over the last three months ÷ the sum of eligible pool OPB at the start of each month.
Delayed vs late paymentDelayed: agreed before the Payment Notice and delay fee paid, so the due date moves. Late: original due date missed; schedule remains, cash counts only when received and the late fee is 4× the delay fee.
Sources: signed Term Sheet dated 9 April 2026; 5 August Master Murabaha draft.
Proposal 4 | Consequences and cure
Live visibility, quarterly testing, drawstop first and default only after persistence
Issue
Signed TS (9 Apr)
5 Aug draft
Sooner proposal
Rationale
AMWAL protection
Testing
Monthly and on drawdown.
Metric wording is monthly; Clause 19.3 says quarterly and on each utilisation date.
Formal covenant reporting and testing quarterly; live integration between test dates.
Separates continuous visibility from formal enforcement.
AMWAL has continuous portfolio visibility through the live integration.
Drawstop
First PAR or Collection breach stops new drawings.
Any Clause 19 breach creates Drawstop.Additions: Default Ratio, Cumulative Default Ratio, borrower minimum cash and parent minimum cash tests.
Below 100: normalized PAR30, normalized PAR60 or Borrowing Base deficiency. From 101: first quarterly hard-covenant breach, including PAR30 and PAR60.
Stops risk growth for severe or confirmed deterioration while normalizing low-scale volatility.
No new funding after the severe or formal hard-covenant trigger.
Event of Default
PAR after 3 consecutive periods; Collection after 2; other covenant breaches have a 15-business-day cure.
Not expressly called out yet.
Only after 2 consecutive quarterly test periods.
Default should require sustained failure.
Drawstop and Borrowing Base act first.
Cash repurchase
Parent repurchases an ineligible receivable at outstanding principal.
Not expressly called out yet.
Add an express cash repurchase cure for PAR, Default Ratio and Borrowing Base. Any effect on Cumulative Default must be mutually agreed.
Removes the affected asset and reduces exposure.
No relief until full cash is received and security is released.
Sources: signed Term Sheet dated 9 April 2026; Clauses 19, 21 and 22 of the 5 August Master Murabaha draft.