True sale
A transfer of assets to a securitisation vehicle that is legally effective so the assets are outside the seller's estate if it becomes insolvent.
How it works
A true sale is a transfer of assets to a securitisation vehicle that is effective in law, so that if the seller becomes insolvent the assets are not part of its estate. Lawyers give true sale opinions at closing.
In GPU and data centre deals
True sale lets data centre and GPU ABS be rated on the asset pool rather than the sponsor's credit. The analysis looks at the price, the seller's continuing involvement and any recourse back to it. Where the assets are leases and buildings, the transfer documents also need to deal with land registration and tenant notices.
What gets negotiated
- Price paid and any deferred purchase price
- Recourse to the seller and repurchase obligations
- Seller's ongoing role as manager
- Formalities to make the transfer effective against third parties
For in-house counsel
Take it to the documents
The filed wording behind GPU and data centre financings, for either side of the table. Previews are open; the full text is free with InfraCompute Weekly.
- Financing clause libraryCash traps, coverage ratios, cures and step-in, from the filed deals.
- Contract libraryGPU contracts, leases, power, equity and JVs, quoted from filed contracts.
- Issues list builderBuild an issues list from the lender’s or the borrower’s side.
- 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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