27 November 2015
Securitisation in Luxembourg
Benefits to originators and investors
Securitisation vehicles in Luxembourg are separate legal entities reliant on a complex configuration of financial arrangements; as such it is vital that parties to these transactions have the right kind of support in place to help them ensure the benefits of reliable and low cost capital.
Of course, there are many other benefits to be had. For example, a securitisation vehicle in Luxembourg can be structured to enable cheaper borrowing costs by ensuring that pricing is not tied to credit rating. Another significant appeal of the Luxembourg securitisation model is the ability to convert non-liquid assets into cash, the ability to diversify the source and the ability to transfer risks to external investors.
Further benefits of the Luxembourg securitisation model are to be found in the sheer number and diversity of asset categories that can be securitised. Anything from shares, loans, subordinated and non-subordinated bonds, real estate, IPR, and alternative assets, to a broad range of risks and activities can be securitised within the vehicle. Plus businesses looking to issue bonds or shares through for private placement can do so under the structure.
Compartmentalisation
Securitisation vehicles in Luxembourg are structured to allow for both revenue streams and risk categories to be broken up into separate sections. This gives investors the opportunity to make targeted investments, avoiding exposure to the kinds of risks that are inconsistent with their needs, while originators benefit by being able to pull in a broader range of investors but with a high degree of specificity. Thanks to the segregation provided by the law, each vehicle's compartments and assets are bankruptcy remote
How can Creatrust help you?
The fact that there are around 1,000 securitisation vehicles operating in Luxembourg is a testament to the success and benefits of the Grand Duchy's securitisation model.
Contact Creatrust for:
.svg)
.svg)
