in-substance debt defeasance

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In-Substance Debt Defeasance

A provision in a loan removing it from a balance sheet if cash or a portfolio is set aside for debt service. Usually, defeasance occurs when a borrower owns a portfolio of Treasury securities whose coupons are used to service a debt. When the borrower has set aside sufficient assets to cover the debt, the debt does not need to be recorded on a balance sheet.

in-substance debt defeasance

References in periodicals archive ?
In substance defeasance differs from sinking funds held by a trustee because the right of offset against liabilities is not permitted under GAAP.
In substance defeasance can also improve the company's debt to equity ratio.