PORTUGAL Law and Practice Contributed by: Benedita Aires and Orlando Vogler Guiné, VdA
1.5 Material Forms of Credit Enhancement
2.2 Sponsors No parties have exclusively taken on the role of sponsor (and certainly not within the meaning of the Securitisation Regulation). To some extent, the role one would consider to be that of a spon - sor is normally split between the originator (for the retention obligation, for instance) and the relevant arranger or lead manager. 2.3 Originators/Sellers The roles of originator/seller are the same as those found in other jurisdictions. Typically, originators have been commercial banks and other credit institutions but also non-financial institutions such as energy distributors, highway concessionaires and football clubs. The origina - tors are responsible for generating the data tape relating to the pool of assets being securitised, and for complying with the applicable risk reten - tion and transparency requirements. 2.4 Underwriters and Placement Agents The roles of underwriter and placement agent are the same as those found in other jurisdic - tions. Underwriters have typically been invest - ment banks, but in more recent years other parties have stepped into the market (eg, finan - cial boutiques). Although these parties are not banks, they are typically regulated and arrange the transaction, source investors and place the notes (but do not subscribe them, in the sense that the risk of lack of placement remains with the issuer/originator and not the placement agent). 2.5 Servicers The roles of servicers are generally the same as those found in other jurisdictions. Regarding per - forming assets, the servicers will normally be the originators but can be other entities, as provided for in the Securitisation Law, provided that the entity has obtained the approval of the CMVM.
The same types of credit enhancement forms are typically found in Portuguese securitisations as in other jurisdictions, including: • tranching of the notes; • subordination of the claims of different noteholders and transaction creditors in the payment waterfalls; • various types of cash reserves held in a specified cash reserve account; • over-collateralisation; and • hedging instruments (most commonly IRS or caps). Guarantees and letters of credit (which can only come from unrelated parties under the Securiti - sation Law) are not common and may trigger unintended tax consequences. 2. Roles and Responsibilities of the Parties 2.1 Issuers Please see 6.2 SPEs . As noted, STCs are the vehicles typically used to purchase receivables portfolios and issue securitisation notes, as FTCs add an unnecessary layer of complexity. STCs are to be used exclusively as securitisation vehicles, by entering into transactions with the above features, which always require the prior approval of the Portuguese Securities Market Commission (the CMVM). For reference, there are several STCs in the Por - tuguese market – some are more directed to the performing securitisation market and others are more devoted to the NPL segment. In any case, the legal object of any STC can comprise both types of deals.
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