{"id":2561,"date":"2022-03-22T13:05:35","date_gmt":"2022-03-22T12:05:35","guid":{"rendered":"https:\/\/fair-alpha.org\/?p=2561"},"modified":"2022-08-11T09:31:26","modified_gmt":"2022-08-11T08:31:26","slug":"luxembourg-securitisations-strict-segregration-of-assets-makes-allocation-of-risks-extremely-straightforward%ef%bf%bc","status":"publish","type":"post","link":"https:\/\/fair-alpha.org\/en\/luxembourg-securitisations-strict-segregration-of-assets-makes-allocation-of-risks-extremely-straightforward%ef%bf%bc\/","title":{"rendered":"Luxembourg securitisations: &#8220;Strict segregration of assets makes allocation of risks extremely straightforward&#8221;"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>Affirming its pioneering role, the Luxembourg Parliament has just modernised its securitisation law, rendering securitisations as investment vehicles more attractive. The recent amendments primarily address the increasing requirements of market participants and create legal certainty in structuring securitisations and the underlying assets.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The amendments remove obstacles that had recently slowed down the structuring of Luxembourg securitisation transactions in some areas: borrowing, corporate form, licensing, regulation and the authorisation for active management. All of these topics have now been addressed and adapted, making Luxembourg securitisations global leaders. \u201cTransparency, flexibility and cost are all arguments for securitisation to make assets or strategies investable\u201d, said Levke Hansen, Board Member at FAIR ALPHA. \u201cBut there is one key point in particular: securitisations continue to allow assets to be strictly segregated, so that risks can be allocated extremely easily.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The key question for many investors is issuer solvency. In case of securities that are issued for capitalisation (shares) or refinancing (corporate bonds) purposes, creditors are paid in a certain order in the event of insolvency or when a company is in financial difficulties: social security funds, employees, financial authorities, suppliers, lenders (banks and bondholders) and, at the very end, the entrepreneurs, i.e., the shareholders. \u201cNormal issuers do not look separately at individual parts of the company\u201d, Hansen pointed out. \u201cBut many institutional investors in particular want this for risk management.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Luxembourg securitisations are not focusing on the securitisation platform as a company. \u201cThe law, and the by-laws of the securitisation companies, stipulate that the rights of investors and creditors are limited to the assets of the respective issue or compartment,\u201d said Hansen. The compartment assets are only liable for claims of their investors and those creditors whose claim arose with establishment, administration or liquidation of the relevant compartment. \u201cCompartments can be defined very narrowly, such that they can be a single asset, a targeted strategy or a single investment\u201d, Hansen added. \u201cIf such a compartment fails to generate returns, neither the securitisation company itself nor its other compartments will be harmed.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">By law and in the terms of issue, compartments are documented and classified as separate entities. \u201cIn this way, the issuer risk is \u2018ring-fenced\u2019 to the individual compartment\u201d, said Hansen. \u201cThis reduces the risk of the individual issue of a securitisation platform exclusively to the relevant compartment.\u201d Under insolvency law, a financial distress or insolvency of the securitisation company or of one of its other compartments can therefore legally not have any impact on the investors of its own compartment.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/fair-alpha.org\/wp-content\/uploads\/2022\/03\/Strict-segregration-of-assets-makes-allocation-of-risks-extremely-straightforward-03.22.2022.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">Download press release!<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Affirming its pioneering role, the Luxembourg Parliament has just modernised its securitisation law, rendering securitisations as investment vehicles more attractive. The recent amendments primarily address the increasing requirements of market participants and create legal certainty in structuring securitisations and the underlying assets. The amendments remove obstacles that had recently slowed down the structuring of Luxembourg [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":"1200","_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[51,56],"tags":[],"class_list":["post-2561","post","type-post","status-publish","format-standard","hentry","category-all","category-luxembourg"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Luxembourg securitisations: &quot;Strict segregration of assets makes allocation of risks extremely straightforward&quot; - FAIR ALPHA Services SA<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fair-alpha.org\/en\/luxembourg-securitisations-strict-segregration-of-assets-makes-allocation-of-risks-extremely-straightforward\ufffc\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Luxembourg securitisations: &quot;Strict segregration of assets makes allocation of risks extremely straightforward&quot; - FAIR ALPHA Services SA\" \/>\n<meta property=\"og:description\" content=\"Affirming its pioneering role, the Luxembourg Parliament has just modernised its securitisation law, rendering securitisations as investment vehicles more attractive. The recent amendments primarily address the increasing requirements of market participants and create legal certainty in structuring securitisations and the underlying assets. The amendments remove obstacles that had recently slowed down the structuring of Luxembourg [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/fair-alpha.org\/en\/luxembourg-securitisations-strict-segregration-of-assets-makes-allocation-of-risks-extremely-straightforward\ufffc\/\" \/>\n<meta property=\"og:site_name\" content=\"FAIR ALPHA Services SA\" \/>\n<meta property=\"article:published_time\" content=\"2022-03-22T12:05:35+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-08-11T08:31:26+00:00\" \/>\n<meta name=\"author\" content=\"Maximilian Nippert\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Maximilian Nippert\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/fair-alpha.org\\\/en\\\/luxembourg-securitisations-strict-segregration-of-assets-makes-allocation-of-risks-extremely-straightforward%ef%bf%bc\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/fair-alpha.org\\\/en\\\/luxembourg-securitisations-strict-segregration-of-assets-makes-allocation-of-risks-extremely-straightforward%ef%bf%bc\\\/\"},\"author\":{\"name\":\"Maximilian Nippert\",\"@id\":\"https:\\\/\\\/fair-alpha.org\\\/#\\\/schema\\\/person\\\/ee9a3e53b99725bae128431dbe65e79c\"},\"headline\":\"Luxembourg securitisations: &#8220;Strict segregration of assets makes allocation of risks extremely straightforward&#8221;\",\"datePublished\":\"2022-03-22T12:05:35+00:00\",\"dateModified\":\"2022-08-11T08:31:26+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/fair-alpha.org\\\/en\\\/luxembourg-securitisations-strict-segregration-of-assets-makes-allocation-of-risks-extremely-straightforward%ef%bf%bc\\\/\"},\"wordCount\":432,\"publisher\":{\"@id\":\"https:\\\/\\\/fair-alpha.org\\\/#organization\"},\"articleSection\":[\"All\",\"Luxembourg\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/fair-alpha.org\\\/en\\\/luxembourg-securitisations-strict-segregration-of-assets-makes-allocation-of-risks-extremely-straightforward%ef%bf%bc\\\/\",\"url\":\"https:\\\/\\\/fair-alpha.org\\\/en\\\/luxembourg-securitisations-strict-segregration-of-assets-makes-allocation-of-risks-extremely-straightforward%ef%bf%bc\\\/\",\"name\":\"Luxembourg securitisations: \\\"Strict segregration of assets makes allocation of risks extremely straightforward\\\" - 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