NEW ZEALAND Law and Practice Contributed by: Deemple Budhia, Ling Yan Pang, Fred Ward and Matt Kersey, Russell McVeagh
1.5 Material Forms of Credit Enhancement
The seller of the receivables to the trust SPE may be the originator, another trust SPE or both. 2.4 Underwriters and Placement Agents The underwriters and placement agents are financial institutions, commonly banks. Where the originator is itself a bank, it may also act as a dealer/placement agent on the securitisation. A dealer/placement agent would only be required for a term securitisation. 2.5 Servicers The originators usually provide the manage - ment and collection services with respect to the receivables. In some non-bank securitisations, back-up servicers or standby servicers may also be appointed at the outset of a securitisation. Where the securitised financial assets are con - sumer credit contracts (which can include leas - es) for the purposes of the CCCFA, the servicer will need to be registered under the FSPA in order to transfer the financial assets to the SPE without notice to the underlying obligor. 2.6 Investors Investors directly lend to an SPE (on a ware - house securitisation) or acquire the notes issued by the SPE. Typically, investors in New Zealand securitisa - tions are institutional or other sophisticated investors who are able to take part in a whole - sale offer – see 4.13 Entities Investing in Secu- ritisation . 2.7 Bond/Note Trustees As discussed further in 4.2 General Disclosure Laws or Regulations , securitisations in New Zealand are generally not public offers and so there is no need for a bond/note trustee or oth -
The most common forms of credit enhancement for securitisations in New Zealand are subordi - nation, cash reserves and over-collateralisation. In addition to credit enhancement, securitisa - tions in New Zealand often have liquidity support in the form of a liquidity facility and the use of reserves (funded on day one and/or by trapping excess spread in the transaction). Where an RMBS is intended to be eligible for the Reserve Bank of New Zealand’s (RBNZ) repur - chase facility, the RBNZ imposes requirements in relation to potential credit enhancement with - in the structure. These are a 5% limit on non- mortgage assets that can be held by the trust and an expectation that no more than 1% of the outstanding pool amount is comprised of non- performing loans or loans with a loan-to-value ratio over 80%. 2. Roles and Responsibilities of the Parties 2.1 Issuers As mentioned in 1.2 Structures Relating to Financial Assets , the issuer for a securitisation in New Zealand is most commonly a bankrupt - cy-remote trust. 2.2 Sponsors Generally, the originator is the sponsor on a securitisation. 2.3 Originators/Sellers The originator is the entity that generated the receivables as the original lender of the receiva - bles. Originators in the New Zealand market are typically registered banks and non-bank lenders.
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