Germany leads asset-backed finance revival

Author: Danielle Myles | Published: 28 May 2015

A bespoke structured finance deal out of Germany last month suggests the resurrection of Europe’s securitisation market is well underway, and that it is diversifying away from the traditional asset-backed securities (ABS) model.

The £400 million ($617 million) asset-backed financing (ABF) achieves the insolvency remoteness of a true sale securitisation, yet enables the sharing of certain risks between the originator and investors.

However its most striking feature is as simple as its governing law. The originating bank is German, yet the underlying pool consists of sterling-denominated mortgages over UK property. In that situation, it is form to transact under English law; but this deal used German documentation.

"It shows some return of trust in the sector," said Burkhard Rinne, counsel at Linklaters which advised RBS in co-structuring the deal. "It can get away structures with assets in one jurisdiction that is governed by the laws of another jurisdiction –...