Moody’s: New Spanish securitisation law aims to boost domestic financial sector 

Spain’s new securitisation law, which aims to stimulate the country’s financial sector, will provide a more flexible framework for securitisation transactions and, as such, will be beneficial for new Spanish securitisations across the asset-backed securities and covered bond markets, says Moody’s Investors Service in a Sector Comment report published today.

Moody’s report, entitled “Spanish Securitisation and Covered Bonds: Spain’s New Securitisation Law Gives Originators More Flexibility and Improves the Management of Some Credit Risks”, is available on www.moodys.com.

“The new law seeks to consolidate existing securitisation regulation, bring the Spanish legal system in-line with its European counterparts, and bolster transparency and investor protection,” says Alberto Barbachano, a Moody’s Vice President — Senior Analyst and co-author of the report.

The new law is articulated around three pillars, in line with international trends. The first aim of the law is to consolidate the regulatory framework governing securitisation into one legal body providing more clarity, certainty and enhanced legal protection to market participants. By way of example, the new law will unify the two existing fund types of Fondo de Titulizacion Hipotecaria (FTH) and Fondo de Titulizacion de Activos (FTA) under the legal category of Fondo de Titulización (FT).

Secondly, the new law will promote the integration of the Spanish legal system with those of other European jurisdictions that have a more advanced position on this matter. To this end, the operational aspects of FTs will be more flexible, removing a number of obstacles that previously prevented Spain from replicating innovative securitisation strategies that have already proven to be successful in neighbouring countries.

“Issuers can more easily create conditional pass-through structures in structured covered bonds than in cédulas, which mitigates the risk of a fire sale in case the issuer becomes insolvent”, says José de León a Moody’s Senior Vice President/ Manager and co-author of the report.

Finally, the new law aims to reinforce transparency and investor protection, in line with international best practice, and set out specific role requirements for management companies, including the administration and management of assets in securitisations funds.

Source: Moody’s – New Spanish securitisation law aims to boost domestic financial sector

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