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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.
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).
Parties involved in securitisation transactions
Securitisation provides a number of benefits for each party involved.
PwC Solution
We consider one of our roles is to be a key driver in promoting a better understanding of the securitisation and structured finance industry, emphasising both the benefits and the potential pitfalls, as well as developing ideas as to the future direction of the industry.
To achieve this challenge, PwC Luxembourg is part of the Global Structured Finance Group (SFG) which is composed of experts and professionals with extensive knowledge of securitisation and structured finance in all the main jurisdictions around the world. Many PwC professionals across Europe, US and Asia provide clients with advice, in-depth market insight and pre-eminent transaction support in securitisation and structured finance deals.
We provide services in the following areas:
Our global presence allows us to provide all audit services for special purpose entities used for securitisations and structured finance transactions.
We can provide tax advice in connection with all aspects of your securitisation, from deal structuring to implementation and monitoring. Through our network of securitisation tax specialists within PwC's global network, we are able to deliver quality tax advice in all major territories. Our close proximity to tax authorities ensures our clients get answers quickly with respect to tax opinions and tax advice relating to securitisations.
We provide advice on accounting treatment of securitisation and structured finance structures under IFRS & Luxembourg GAAP and other accounting frameworks. We can help you comply with applicable regulations through regulatory advice and guidance on the latest developments in accounting and regulatory rules and their impact on structures.
Provided through PwC's Academy, we run tailored training courses to educate and train clients new to the securitisation and structured finance market.
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