28 September 2015
Securitisation market in Luxembourg remains vital
Luxembourg securitisation market - exciting times ahead
The securitisation market in Luxembourg remains an increasingly attractive option to investors, with almost 1,000 securitisation vehicles currently operating in Luxembourg. This is despite the economic downturn which began in 2008 and reduced the 2014 securitisation insurance market in Europe to just a fraction of its pre-crash volume.
And with the European Central Bank and the EU Commission currently working towards the creation of even more effective securitisation markets, it is clear that there are exciting times ahead. So, it is reasonable to expect some significant growth.
For example, in February 2015 the European Commission published a Green Paper on the Capital Markets Union. This made clear the EU's commitment to a stable and prosperous securitisation market supported by strong EU frameworks and regulatory structures.
In many ways, such steps are lessons learned from the sub-prime mortgage crisis in the US. A higher value is now placed on relatively straightforward and transparent securitisation structures, built upon quality and enduring assets, and even the global political fallout has begun to fade.
Politicians around the world now publicly recognise the role that securitisation has to play in the vitality of capital markets and this has had many benefits for investors; not least the fact that simplified and more transparent securitisation structures are less labyrinthine and therefore easier to understand.
In some ways, Luxembourg felt only a limited impact of the 2008 financial crisis. Its securitisation market continued and continues to thrive.
Luxembourg's Securitisation Law allows companies to create more than one compartment and there are thought to be around 4,000 such compartments created within the 926 securitisation vehicles currently operating from inside Luxembourg.
Promoters usually make the choice to set up a securitisation vehicle which stays unregulated as long as it does not issue securities to the public on a continuous basis. These conditions are cumulative, therefore many take advantage of this, so, it is little wonder that Luxembourg is the jurisdiction of choice for so many discerning international clients.
How can Creatrust help you?
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Analysis of the proposed waterfall
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Security issuance and listing
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Corporate, legal and tax advisory
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Set-up of your securitisation vehicle
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Securitisation vehicle accounting
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