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Securitisation Undertakings

A special purpose vehicle to securitise any asset or risk linked with receivables

Regulated or unregulated securitisation companies and securitisation funds are defined under the Luxembourg securitisation act of 22 March 2004.

The Luxembourg law allows the securitisation of many types of assets, risks, revenues and activities and makes securitisation accessible to all types of investor (institutional or individual). Issuers will issue securitisation vehicles as an alternative to traditional bank funding.

An extremely wide range of assets can be securitised: securities (shares, loans, subordinated or non-subordinated bonds), risks linked to debt (commercial and other), movable and immovable property (whether tangible or not) and, more generally, any activity that has a certain value or future income.


Securitisation process

Securitisation undertakings established in Luxembourg are incorporated by a promoter to securitise any type of assets or risks linked with receivables or any activities realised by third parties. The process of securitisation is understood as acquiring risks from an originator by issuing a security the value of which and associated yields are linked to the underlying asset.

Securitisation is an operation by which investors buy securities, i.e. transfer cash to a securitisation vehicle (SV), in order to obtain the proceeds from the investments made by that vehicle. SVs are assets that produce a predictable cash flow or grant the right to a future cash flow, transforming these assets into securities (shares, bonds or other securities). Investors, however, also carry the risk of any uncertainty in these cash flows.

 

 Complete cycle of securitisation in Luxembourg

 

These securities can be qualified as Asset-backed Securities (ABS), because the underlying assets serve as collateral for the investment. As such, the investor normally carries two risks: the uncertainty of a future cash flow and the risk of valuation of the underlying asset.

For example, a bank may decide to sell the risks associated with their real-estate loan portfolio to investors, thereby effectively removing this risk from their balance sheet. The buyer of these risks is entitled to the cash flow related to the interest paid by home owners and to the underlying homes in case of default of the home owners.

 

At the forefront of securitisation services in Luxembourg

Creatrust works to secure and advance the interests of clients and to provide services that help them transform their assets and financial futures. Our services are defined by the following:

  • In-house knowledge of all the major regulatory and development issues

  • Commitment to sourcing the most appropriate solutions for establishing and managing securitisation vehicles

  • Strong and open relationships with clients based on clear communication and trust

  • Independence

Creatrust provides a range of services for clients, including administration, tax advice and security issuance. To request a brochure, click on the button on the right-hand side of this page or read on for more information on securitisation undertakings.

 

Securitisation vehicle: company or fund

Types of assets acquired by a Securitisation entity

Different Securitisation Entity's Forms

Segregation, Ring Fencing, Bankruptcy remoteness, Synthetic Securitisation

Luxembourg Regulation

Tax framework


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Creatrust is a member of the Ordre des Experts Comptables (Luxembourg) and an independent member of TGS Global Network Limited, an international network of professional business advisors.

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