A type of corporate debt whereby the collateral value is below standard requirements (usually lower than 30% of the company’s enterprise value). In other words, the value of collateral posted to secure debts is less than normal levels, and hence a debt collateralized with a tiny asset base is said to be “light”. With asset-light debt, a company’s collateralized debt percentage falls considerably below standard levels (e.g. 10%) or might even be nothing at all.

Asset-light debt structures were introduced in late 2005 and became popular through the first half of 2007 before becoming unpopular as the financial crisis intensified. Such structures may involve the establishment of a holding company to issue debt and extinguish it using profits from the original company.