LUXEMBOURG Law and Practice Contributed by: Vassiliyan Zanev and Natalja Taillefer, Loyens & Loeff Luxembourg S.à r.l.
1.4 Special Purpose Entity (SPE) Jurisdiction
2.3 Originators/Sellers The originator/seller is an entity that has origi - nated or was otherwise involved in the original agreement giving rise to the exposures being securitised or, alternatively, buys the relevant exposures on the secondary market with the intention to subsequently securitise them. Depending on the type of the securitised assets, the originator can be a credit institution, a trad - ing undertaking, a manufacturer, an insurance company, etc. The originator/seller then trans - fers the assets or the economic interest pertain - ing to the assets to the SPE. With regard to the securitisations falling within the scope of the Securitisation Regulation, an originator, the sponsor or the original lender of a securitisation (each as defined in the Securiti - sation Regulation) must comply with the risk- retention requirements as described in Article 6 of the Securitisation Regulation. 2.4 Underwriters and Placement Agents The underwriter (often an investment bank) serves as an intermediary between the issuer and the investors in an offering. The underwriter analyses investor demand, provides guidance on structuring the transaction and underwrites the notes. 2.5 Servicers The servicer is in charge of collecting and enforc - ing the securitised receivables. This role is often performed by the originator, but other special - ised service providers may also be appointed. Currently, the securitisation undertaking may, according to the Securitisation Law, entrust the assignor or a third party with the collection of claims it holds as well as with any other tasks relating to the management thereof, without
Luxembourg remains one of the most popular jurisdictions of establishment for SPEs (by the number of SPEs) in the world. The main fac - tors contributing to its success are its detailed yet flexible legal framework that accounts for the practical needs of the investors and SPEs and provides a wide array of efficient structur - ing tools and eligible assets, but also its stable political and economic environment, high degree of legal certainty, as well as access to savvy ser - vices providers. 1.5 Material Forms of Credit Enhancement Third-party guarantees, letters of credit, reserve funds and over-collateralisation are standard credit enhancement tools. Often, the financial instruments issued by the securitisation under - taking are split into several tranches carrying dif - ferent risk and return profiles. 2. Roles and Responsibilities of the Parties 2.1 Issuers The issuer is a bankruptcy-remote SPE under the Securitisation Law acquiring the securitised risk and transferring it to the investors, mainly through the issuance of debt financial instru - ments. Most SPEs in Luxembourg are unregu - lated. 2.2 Sponsors The sponsor is the originator or other entity ini - tiating and co-ordinating the securitisation pro - cess. For any securitisations falling within the scope of the Securitisation Regulation, a spon - sor needs to be a credit institution or an invest - ment firm.
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