Residual value guarantee (RVG)
An undertaking to meet a specified asset-value shortfall under defined conditions at a specified date or disposal event.
How it works
A residual value guarantee (RVG) is a promise by a third party that an asset will be worth at least a stated amount at a future date. If the asset sells for less, the guarantor pays the difference. RVGs are common in aircraft and equipment finance.
In GPU and data centre deals
In AI infrastructure, RVGs are used to support the value of GPUs or data centre buildings at the end of a contract, so lenders can lend for longer than the customer contract runs. Guarantors may be manufacturers, specialist insurers or the customer itself. The value of an RVG depends on the guarantor's credit and the conditions attached to a claim.
What gets negotiated
- The guaranteed amount and the date or event that triggers it
- Conditions for a claim: return condition, sale process and timing
- The guarantor's credit and any collateral it posts
- Assignment of the benefit to the lenders
Why the distinction matters
Identify the guarantor, beneficiary, covered assets, value definition and payment trigger. A value floor may exclude removal costs and may not cover the remaining debt.
Read the structure
What a value floor can cover, and the recovery risks that can remain.
Residual value guarantees and GPU exit risk ↗In the filed deals
Meta provides an RVG on its Hyperion campus, with a guaranteed minimum value at each four-year renewal date.
For in-house counsel
Residual value guarantee in the filed documents
Where the term turns up in filed contracts and what is market, for the lender’s or the borrower’s side. Previews are open; the full text is free with InfraCompute Weekly.
- What’s market: Remarketing and RVG when a customer rejects GPUsWhat happens to the loan if the customer validly rejects a tranche of GPUs?
- Clause library: Remarketing right and RVG on non-acceptanceIf the customer validly rejects a tranche of GPUs, the borrower must sell or redeploy them within a short window. In Nscale's…
- Financing clause libraryCash traps, coverage ratios, cures and step-in, from the filed deals.
- The legal desk for in-house counselContract library, issues lists, checklists and English law notes.
Related terms
Explanatory definition, not a statement that a particular transaction contains this term or a substitute for its contractual definition.
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