Asset-Based Finance (ABF)

Financing where repayment is primarily sourced from cash flows generated by a specific pool of financial or real assets, rather than from the general operating cash flows of the borrower. Broader than ABS: includes private bilateral loans, warehouse facilities, forward-flow agreements, SRT structures, and publicly issued securities.

Special Purpose Vehicle (SPV)

A bankruptcy-remote legal entity created solely to hold assets and issue securities or borrow against those assets. Bankruptcy-remoteness is the defining feature — achieved through limited purpose charter, limited recourse provisions, and non-consolidation opinions.

True Sale

A transfer of assets constituting a legal sale (not a secured loan) so that the assets are excluded from the originator's insolvency estate. Requires: (1) intent of parties; (2) no obligation to repurchase at par; (3) no practical control retained; (4) supported by a true sale legal opinion. See also: VIE/ASC 810 for US GAAP consolidation consequences.

Risk Retention (5% Rule)

EU SR Article 6 / UK SR requirement: originator, sponsor, or original lender must retain ≥5% material net economic interest. Can be: (a) vertical slice; (b) random sample; (c) first-loss tranche; (d) first-loss in each tranche; (e) seller's interest in revolving structures.