Refinance register revolutionizes German true sales

Author: | Published: 1 Aug 2005

Germany is simplifying true-sale securitizations in an effort to encourage growth in the country's securitization market.

Legislation will come into effect in late July to eliminate some of the insolvency and enforcement complexities in true-sale securitizations. "Currently, legal structures rely on a certain element of goodwill in terms of insolvency," says Ralf Hesdahl, partner at Mayer Brown Rowe & Maw Gaedertz. "The parties have to agree on trigger events, such as if ratings fall under a defined level."

The legislation's main purpose is to provide beneficiaries (such as noteholders) insolvency-proof access to the seller's assets and collateral. A refinance register will be introduced that will allow the creditor to claim the originator's assets in the event of the originator's insolvency, without needing to transfer the relevant collateral. An insolvency-proof special purpose vehicle...