Definition for : Defeasance
GLOSSARY LETTER
In defeasance, one of the Off-balance sheet financing techniques, the borrower simultaneously sells Debt and a portfolio of Assets to a special-purpose vehicle. The portfolio of Assets is designed to meet Interest payments and repay the Principal of the Debt. The Assets of the SPV are Risk-free assets or low Risk.
(See Chapter 22 Shares of the Vernimmen)
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