Asset-Light Debt

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DEFINITION of 'Asset-Light Debt'

A corporate debt that has less than the usual amount of collateral, which is normally 30% or more of the company's value. With asset-light debt, that number is much lower, with many companies' collateralized debt percentage falling far below the previous standards. It can sometimes even be at zero.

INVESTOPEDIA EXPLAINS 'Asset-Light Debt'

A company may use this strategy by creating a a holding company. The company would then use the holding company to issue debt and pay off the debt through dividends from the original company.

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