Special Purpose Vehicle Analysis

A Special Purpose Vehicle (SPV) is a separate legal entity created for a specific financial purpose, such as isolating risk or holding assets. In quantitative finance, SPVs are often used to manage investments, facilitate transactions, or bundle loans while limiting exposure for the parent company. By using an SPV, firms can structure financial products in a way that makes them more appealing to investors or easier to understand in terms of risk. Analysis of an SPV involves assessing the financial structure, performance, and risks associated with its investments or obligations to ensure informed decision-making.