PORTUGAL Law and Practice Contributed by: Benedita Aires and Orlando Vogler Guiné, VdA
exposures assigned to the issuer (receivables), regarding the calculation of the originator’s capital requirements, should be highlighted, as should the treatment of securitisation positions, regarding the calculation of the relevant owner’s own funds. 4.7 Use of Derivatives Derivatives are contracted in the ISDA format, and SPEs do not normally place collateral, even though they may be receiving it from the swap counterparty, usually if certain rating triggers are met. The CMVM supervises the use of derivatives in Portugal by SPEs under the Securitisation Law and the European Market Infrastructure Regula - tion. 4.8 Investor Protection The key statutes for investor protection are the Securitisation Regulation, the Securitisation Law and, where applicable, the Prospectus Regula - tion, as complemented by the relevant second - ary and other legislation. 4.9 Banks Securitising Financial Assets The key statutes applicable to securitising banks are the Securitisation Regulation, the Securitisa - tion Law, the Civil Code and the CRR, as com - plemented by the relevant secondary and other legislation (including Bank of Portugal and ECB regulations and guidance, which provide, inter alia, for pre-notification of the transaction and ongoing reporting, on top of the Securitisation Regulation disclosure requirements). 4.10 SPEs or Other Entities There are only two specified SPEs in the Por - tuguese jurisdiction that may be assignees in securitisations under the umbrella of the Secu - ritisation Law: STCs and FTCs. STCs have been
used consistently over the last decade (both SPEs were used previously) as they are more efficient than FTCs, which require an additional vehicle to hold the FTC’s units and then issue asset-backed notes to the investors. 4.11 Activities Avoided by SPEs or Other Securitisation Entities Portuguese securitisations are conducted using regulated SPEs. However, regulatory issues often arise stemming from other jurisdictions, notably the US, including whether or not the SPE can be considered an investment company under the Securities Act or a covered fund under the Vol - cker Rule. This depends on a US law analysis, but the answers have typically been negative. The analysis of the second matter is more complex, and issuers sometimes require a US legal opinion confirming that they fall outside the scope of a covered fund. Such matters are addressed in the prospectus and also in the relevant subscription agreement and/or master framework agreement. 4.12 Participation of Government- Sponsored Entities There are no government-sponsored entities actively participating in the Portuguese secu - ritisation market as yet, even though there has been one significant transaction with tax and social security credits securitised by the Portu - guese tax and social security authorities. 4.13 Entities Investing in Securitisation Following the financial crisis, during which there was no real investor appetite (other than for private deals in the NPL market), new transac - tions have come to the market and started to be publicly placed. Placement is conducted by the relevant lead manager or placement agent. In any case, investors can include institutional
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