GHANA Law and Practice Contributed by: Adelaide Benneh Prempeh, Michelle Nana Yaa Essuman, David William Akuoko-Nyantakyi and Audrey Nana Oye Addy, B&P Associates
1.5 Material Forms of Credit Enhancement
the Special Purpose Entity (SPE), or alternatively, acquires the exposures of other entities with the objective of securitising them. The originator is usually a financial institution, such as a bank, that provides credit. However, other types of originators can include large commercial enter - prises, utility companies, or specialised enti - ties created specifically for securitisation. The originator often engages an arranger – usually an affiliate – to structure the transaction. In the context of securitisation in Ghana, the originator is often the government. 2.4 Underwriters and Placement Agents Underwriters are corporate entities that purchase securities directly from an issuer and then sell them to open-market investors (see Section 109 of Act 929). An underwriter may be an invest - ment bank; when the underwriter is a bank, it is commonly referred to as an issuing house. The underwriter is responsible for facilitating the sale of the issuer’s securities to initial investors, acting as an intermediary between the issuer (SPE) and the investors. It assesses investor demand and, in collaboration with the Credit Rating Agency, provides strategic guidance on structuring the transaction in an efficient and cost-effective way. To function as an underwriter, a company must be duly licensed by the Securities and Exchange Commission (SEC). Underwriters may operate as Licensed Dealing Members (LDM) who con - duct transactions through Authorised Dealing Officers. When issuing a bond on the Ghana Stock Exchange (GSE), the issuer must appoint an LDM to sponsor its listing application. The LDM is responsible for submitting all required applica -
As mentioned, securitisation transactions in Ghana are rare. However, in instances where such transactions do take place, over-collateral - isation is the most frequently employed method of credit enhancement. 2. Roles and Responsibilities of the Parties 2.1 Issuers The term “issuer” refers to an entity established, typically by a financial institution, for the spe - cific purpose of acquiring assets and achieving off-balance-sheet treatment for both legal and accounting purposes. In securitisation, the issu - er typically refers to the Special Purpose Entity (SPE) created for the securitisation process. The issuer’s main role is to create securities and offer them to the public. When issuing securities to the public, the issuer is responsible for adhering to all applicable regulatory requirements. 2.2 Sponsors The sponsor plays an essential role in a secu - ritisation transaction. The sponsor, typically a major financial institution, is often the originator or an affiliate of the originator. More precisely, the sponsor is often the parent company or a related arranger of the loan-originating subsidi - ary that serves as the primary originator for the specific asset-backed securities (ABS) trans - action being executed. In most securitisation transactions that have taken place in Ghana, this role has primarily been undertaken by the government of Ghana. 2.3 Originators/Sellers The originator is the entity that initially pools the assets to be securitised, and transfers them to
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