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Purpose Vehicle - SPV |
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1.
Also called a "bankruptcy-remote entity" whose operations
are limited to the acquisition and financing of specific assets. The
SPV is usually a subsidiary company with an asset/liability structure
and legal status that makes its obligations secure even if the parent
company goes bankrupt.
2. Also
called a "derivatives product company". A subsidiary corporation
designed to serve as a counterparty for swaps and other credit sensitive
derivative instruments.
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The
result is the SPV's assets are shielded, improving the companies credit
quality and significantly reducing the cost of capital.
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Dictionary
