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Securitisation: the big picture in 2019

Five views on the resurgence of the securitisation market 

A snapshot of the global securitisation market

The global securitisation market has undergone extensive transformation over the past decade as regulators around the world have sought to reform and encourage the rebuilding of a sector that was central to the global financial crisis. A revised and enhanced regulatory framework, with greater transparency and simplicity, is breathing new life into what were often complex and opaque structures. Investor confidence is slowly returning, and banks are better placed to free up capital for further lending. Besides the traditional credit risk securitisation investors have also favoured securitisations in the form of repackaging of other asset classes.

A new era for securitisation

While the asset-backed securities market remains far below pre-crisis levels, it has become more active in recent years, with outstanding European market securitisation assets worth €1.21 trillion in mid-2018, compared with €8.46 trillion in the US. Market growth has been largely driven by solid credit performance and investor confidence that securitisation vehicles no longer contain the ‘toxic waste’ that helped to bring the financial industry to its knees in 2007-09. With a clearer vision and a sharper focus on the need for simplicity and transparency a new style of securitisation vehicles is emerging.

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Read on to hear views from our partners on the current state of play in the securitisation market or download the factsheets below. 

The big picture

Our experts cover the key areas of securitisation you need to know.
1

Lessons learned

“The post-crisis response to the demonization of securitisation has seen regulators, bankers and investors around the world walking an often-bumpy road together to establish a regulatory environment where structured finance can support sustainable economic growth. A more cautious, chastened market is evolving seeking to re-build investor confidence.”

Patrick Geortay, Managing Partner
Linklaters Luxembourg

2

Streamlined legislation

“Within a legal environment that becomes ever more complex, the Luxembourg securitisation law offers after 15 years still some untapped possibilities. New structures are being devised in order to adapt to the new challenges.”

Nicki Kayser, Capital Markets and Banking Partner
Linklaters, Luxembourg

3

Spreading risk

“Securitisation provides new investment opportunities for institutional investors in asset classes and products that in the past were accessible only by banks. This provides the potential for generating higher returns for investors but also spreads risk across the financial sector from banks to insurance companies and funds. This diversification offers not only better risk management but also a greater degree of stability and resilience across the financial system.”

Vinay Samani, Capital Markets Partner
Linklaters London

4

Changing tax landscape

“The evolving tax environment and new general tax rules may have an unexpected and undesired impact on more sophisticated types of securitisation transactions. The uncertainty that this creates may lead to new ways of structuring securitisation deals to preserve the tax neutrality for the investors.”

Olivier Van Ermengem, Tax Partner
Linklaters, Luxembourg

5

German opportunities

“The securitisation market offers, for different reasons, attractive investment opportunities to German institutional investors. For such investors, the Luxembourg securitisation regime generally provides a familiar, stable and efficient environment.”

Martin Mager, Investment Funds Managing Associate
Linklaters, Luxembourg

Key Contacts