Back to basics

Structured investment vehicles are off-balance sheet entities that, rather like their bank parents, sell short and buy long. A species of conduit, SIVs fund themselves using short-term debt - via the asset-backed commercial paper and medium-term note markets - and invest the proceeds in higher-yielding longer-dated securities, often asset-backed securities. Devised in the late 1980s, SIVs are highly leveraged entities in that they seek to invest many times the initial capital they raise through

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