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The last few weeks have proven to be a tumultuous period for the capital markets, and with it a stark (and painful) reminder has been duly delivered on the impact that they have on all aspects of business and the wider economy. Securitisation has also shown that it is not immune to this turmoil demonstrated…

So called ‘sunshine backed bonds’ are one of the newest and most exciting asset classes to enter the asset-backed securities market since the financial crisis. The resurgence of the market has led to a number of esoteric ABS issuances in recent months but it was solar energy that seemed most ripe for applying securitisation techniques (which provide an especially powerful financing tool). Indeed, given how this financing technique revolutionised the mortgage finance market 30 years ago, it now seems poised to play a role in transforming the renewable energy markets across Europe.

The case for securitising solar

In essence, securitisation allows companies to access the capital markets and in so doing to bring down their cost of capital and improve liquidity. Pools of illiquid assets are sold to bankruptcy-remote vehicles which then issue bonds to investors which are backed by the pool of assets. The originator of the assets is able to turn illiquid assets into saleable securities and in so doing shift those assets, and the risk of ownership, off its balance sheet in return for new finance.
Continue Reading Sunshine backed bonds – time to look on the sunny side?

On 4 September 2013, the European Commission published a draft regulation on the regulation of European money market funds.  Money market funds are important investors in certain types of securitisation, particularly asset backed commercial paper, and the draft Regulation includes some detailed provisions dealing with this relationship.  This is explained in the recitals: “Due the fact that during the crisis certain securitisations were particularly unstable, it is necessary to impose maturity limits and quality criteria on the underlying assets”.  The limitations imposed are such that the only types of securitisation which are eligible are those with underlying assets consisting of short term corporate debts, such as trade receivables.  Assets linked to the acquisition or financing of services or goods by consumers (such as personal loans, auto loans,  credit card debts and residential mortgages) are expressly excluded.  The draft regulation also requires that the underlying corporate debts be “of high credit quality and liquid”.
Continue Reading Regulation of Money Market Funds and Securitisation

As one of the newest junior associates to join the growing Structured Finance Group at Reed Smith, there are times when I feel that I have the best seat in the house to witness the changes going on in this tumultuous period for our financial markets.  The economy as a whole, and its associated regulatory regime are in a clear and sustained state of flux.

The main benefit of this for someone at my stage of their career is that it encourages you to “challenge the unchallengeable.”  Ideas and concepts that were previously accepted practice are now being reformulated and reconsidered.  The building blocks which were simply taken as read are now questioned and analysed in detail. 
Continue Reading Challenging the Unchallengeable

Those issuers, corporate services providers, collateral managers, servicers and special servicers that regularly submit debt announcements on the Irish Stock Exchange will know how straightforward and quick it is to submit.  For those that don’t, at present this process involves simply sending a copy of the notice or announcement to the email address announcements@ise.ie and the publication is free of charge if a Word version of the notice is sent. 
Continue Reading Irish Stock Exchange announcements – Its all change at the Exchange!

It’s been a year since I joined the structured finance team. I can’t believe it went by so fast. A year of learning and moving forward. Downgrades, liquidity drawings and agent replacements in the summer, noteholder meetings in autumn, covered bonds and refinancing of old CMBS deals in the new year. Inevitably, this one year mark makes me think how much I’ve changed, and how much I’ve learned in the process. It also makes me think how much the ABS markets and the types of investors in those markets have changed since the emergence of the subprime mortgage crisis and the credit crunch.
Continue Reading From Finance 101 to CMBS 2.0