off balance sheet conduits definition

off balance sheet conduits

A special purpose vehicle (SPV) used by a financial institution to hold assets that are used to issue highly rated commercial paper. These SPVs are not registered on the balance sheet of the financial institution, as the SPV is treated as a separate entity. The use of off balance sheet conduits allows financial institutions to limit disclosures, but the financial institution could still be exposed to debts associated with the SPV.

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