This content is from: Local Insights


In April 2008, the Luxembourg Commission for the Supervision the Finance Sector published its report for 2007. One of the aims is to clarify the legal environment applying to securitisation vehicles (SVs) governed by the law of March 22 2004 on securitisation, being:

  • The possibility for SVs to grant loans: the loans must be put in place by third parties and the issuance documentation has to specify the assets on which the repayment of the loans depends, or the criteria for the borrowers' selection.
  • The possibility to securitise loans not yet fully drawn down or revolving loans: there must be a pre-determined framework for such loans and an absence of discretion for the SV regarding the choice of borrowers or the terms of the loans.
  • The possibility to securitise commodities, as long as that the acquisition by the SV is designed to provide financing, and such commodities constitute a collateral securing the repayment of the obligations of the entity to which the financing is provided and generate cash flows in favour of the investors.
  • The possibility to securitise shares or units in UCIs, hedge funds, limited partnerships or other companies holding the securitised risks, provided that the SV is not actively involved in the management of the entities in which it has (in)direct participation, and the SV does not provide services of any nature to such entities.
  • The possibility for SVs to borrow for leverage purposes (provided the SVs are substantially financed through the issuance of securities), during the warehousing phase (on a temporary basis), or for liquidity (matching) purposes to cover temporary shortfalls.

Vassiliyan Zanev

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