New ways using Luxembourg

Russian investors already acknowledge the benefits of using a Luxembourg-based securitisation undertaking (SU). A major Russian bank establishing a regulated SU in 2005 and in 2006 the biggest Russian securitisation was structured using an SU. In 2007, the first cross-border acquisition of a mortgage portfolio from the Agency for Home Mortgage Lending was conducted using an SU. And that year the first Russian diversified payment rights issue to receive investment grade certification from S&P was completed using an SU.

The popularity of SUs derives from the favourable legal and tax regime to which they are subject. Without entering into a detailed analysis of the legislation, the most notable benefits are:

The possibility of creating ring-fenced compartments to which all the rights of investors in a particular series of securities may be allocated. Such investors have no recourse against the assets in other compartments in the event that the claims...