A BBB-rated corporation wishes to issue debt to fi
A BBB-rated corporation wishes to issue debt to finance its operations at the lowest cost possible. If it decides to sell a pool of receivables into a special purpose vehicle (SPV), its primary motivation is most likely to:
A. allow the corporation to retain a first lien on the assets of the SPV.
B. segregate the assets into a bankruptcy-remote entity for bondholders.
C. receive a guaranty from the SPV to improve the corporation’s credit rating.
参考解答
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2024-11-14 18:42:36
Ans:B;
B is correct because a key motivation for a corporation to establish a special purpose vehicle (SPV) is to separate it as a legal entity. In the case of bankruptcy for the corporation, the SPV is unaffected because it is not a subsidiary of the corporation. Given this arrangement, the SPV can achieve a rating as high as AAA and borrow at lower rates than the corporation.
A is not correct. SPV does not allow the corporation to retain a first lien on its assets.
C is not correct. The SPV receives a higher rating than the unsecured debt of the corporation, because the assets are transferred into a separate entity and shielded from the claims of the corporation’s general creditors.
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