While almost any type of security can be used in a repo, funds prefer to have . Treasury or other government obligations as the collateral for most of their transactions. For added security, the collateral must equal at least 102 percent of the loan amount. 7 The transaction is called a repurchase agreement because the securities are actually sold to the lender or investor at the beginning of the period of the loan; the borrower agrees to repurchase the securities at the end of the loan term, usually at the same price. (That’s different from a typical secured loan; for those loans, the collateral is simply set aside in.
