Bankruptcy remote SPV

In a securitisation structure, a bankruptcy remote SPV uses the proceeds of the debt issue to acquire the properties. It then leases them back to the seller for a term that will equal or exceed the tenor of the debt issue. Lease payments will service the debt in one of various ways The debt may be fully amortised over the term (although this gives rise to a significant tax mismatch) the debt may be partially amortised, which requires refinancing or a sale of the property to ensure repayment of the debt at maturity or the issue size may be increased to fund the purchase of a zero coupon bond to repay the principal at maturity. A typical structure is illustrated in Exhibit 12.4. 

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