Securitisation

Securitisation
Podcast Securitisation
Parties involved in securitisation transactions. Securitisation provides a number of benefits for each party involved

Securitisation

The challenge

Securitisation is a flexible, efficient and lower-cost way of raising capital. Briefly, securitisation is a type of structured financing in which a pool of financial assets with predictable cash flows or rights to future income streams is transferred from an originating company (the "Originator") to a "Special Purpose Vehicle" (the "SPV"). This SPV subsequently issues debt packages backed by the assets transferred and payments derived from these underlying assets purchased with the proceeds of the issuance.

Simplified securitisation schema

The Luxembourg Securitisation Law

The Luxembourg Securitisation Law offers an attractive regulatory framework for setting up workable securitisation structures in Luxembourg at reasonable cost. The key features which make the Securitisation Law attractive in practice are summarised as follows:

  • Enormous flexibility in entity establishment from a cost and structural point of view;
  • Legal certainty;
  • Broad bankruptcy remoteness mechanisms;
  • Qualified service providers in Luxembourg;
  • Tax neutrality.

Such enormous flexibility is also the result of having studied the different securitisation transactions effected on the Luxembourg market since the establishment of the Securitisation Law. In addition to the attractiveness of the Securitisation Law, the Luxembourg market offers some soft factors which should not be underestimated:

  • High degree of expertise of market players (banks, corporate service providers, auditors, etc.);
  • Large range of market players already present in Luxembourg;
  • Liberal tradition in the sense of more flexibility compared to other European countries; and
  • Proximity and accessibility of the regulator (precisely for regulated securitisation vehicles)


Contact

Holger von Keutz

Holger von Keutz
Securitisation Leader
Tel: +352 49 48 48 2383