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Spain

After the 1992 enactment of the regulatory scheme for the securitization of mortgage assets, the government prepared a draft Royal Decree to regulate securitization funds for non-mortgage assets. Approval of this Royal Decree is expected in the next few months.

From a legal stand-point, the model is configured as a fiduciary structure over determined assets, with no corporate status, to be implemented by way of Asset Securitization Funds (ASF). From a financial stand-point, the proposed law will include financial assets and the assignment of present and future credits. It provides for inclusion of motorway concessionaires' rights to toll collection, or rights pertaining to the lessors of urban real property. It is expected that this list will be increased by specific ministerial orders.

Financing of ASF is by way of fixed income securities, and up to 50%, by loans granted by credit entities. Securities issued must be admitted to trading on a secondary market. In addition, institutional investors may make subordinate contributions, in that they are entitled to any remainder on liquidation of the ASF.

The regulatory scheme allows for the creation of open and closed structures, on either the assets or liabilities sides or both of them, thus allowing the securitization of short- and medium-term cash flows.

In addition to supervision by the Spanish National Securities Market Commission, control measures include the obligation to obtain a rating from a recognized rating agency over the financial risks of the securities issued, as well as the auditing of the assets which form part of the ASF's balance sheet.

The ASFs will be managed by management companies, which must obtain a special authorization from the Ministry of Economy and Revenue. It is expected that companies managing existing mortgage asset securitization funds will be allowed to adapt their regulatory scheme to this new law.

Finally, ASFs intended for institutional investors provide for reductions in both formal and substantive requirements, thus giving increased flexibility.

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