in-substance debt defeasance

(redirected from In Substance Defeasance)

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 ?
Matthews, group senior vice president and chief financial officer, said that "while these bonds were retired in May 1990 through an in substance defeasance to optimize capitalization; due to the decline in interest rates, it has become economically prudent to redeem these bonds.