With more than a 100% increase in 2016, the number of newly established securitization vehicles in Malta is on the rise making Malta more and more attractive in the securitization market. Below are just some of the benefits of setting up this type of structure on our sunny island. Seruritisation: Why Malta?
Maltese legal framework offers a unique combination of benefits for investors. All securitization transactions are regulated by several regulations:
- The Securitization Act (chapter 484 of the laws of Malta)
This Act is also supported by:
- Securitization Transaction (Deductions) Rules, Subsidiary Legislation number 123.128 of the Laws of Malta, and
- Securitization Cell Companies Regulations, Subsidiary Legislation 386.16 of the Laws of Malta.
How does it work?
Securitization is the financial practice of pooling various types of contractual debt or other non-debt assets that generate receivables into a single asset-backed security (or mortgage backed in case of bonds), and selling their related cash flow to third parties.
What type of structure can be used?
The types of securitization transactions that can be included within a Maltese securitization vehicle are vast: from synthetic risk transfer securitization to multiple asset-classes such as credit card receivables, lease/charter payments for aircraft and ships, passing through income/loyalty streams for intellectual property assets like copyrights, trademarks and patents, present assets or future assets, movable or immovable. These are just some of the types, the range of possibilities is much broader, and they all are covered under the license of the MFSA.
What are the rights for securitization creditors?
Some enforcement power on the sale?
The Act requires a “true sale” in asset securitization transaction. The transfer of a securitization vehicle is valid and enforceable on its term, and at the same time it is not subject to the claims of the originator’s creditors in insolvency or otherwise.
Bankruptcy risk?
Securitization vehicles established under Maltese law are bankruptcy remote from the originator by operation of the law. There is an express disposition in the Act which states that no proceedings taken in relation to the originator under any law will have effect on the securitization vehicle, on the securitization assets acquired or any other asset of the securitization vehicle.
Any priority right?
Under Maltese Law, creditors and investors can also benefit from a first ranking privilege with regards to all assets held by the securitization vehicle (except for other securitization creditors to whom the priority was given with the consent of the investors).
Contact
Simona Angotzi
Corporate Administrator
simona.angotzi@whitenovember.com
Simona Angotzi is a Corporate Officer in White November Group Corporate Department.
