SPAIN Law and Practice Contributed by: Jaime de la Torre and Jaime Juan Rodríguez, Cuatrecasas
tasks. The remaining tasks can be (and usu - ally are) delegated as part of the servicing arrangement. This issue can be particularly important when securitising non-performing loan portfolios. • Other loans – the management company usu - ally completely delegates the management of the assets to a servicer (usually the seller), but this delegation does not impair the primary liability of the management company under Article 26 of the Spanish Securitisation Law, which shall continue to be liable vis-à-vis the noteholders. 3.6 Principal Defaults Four different sets of defaults can be differenti - ated. • SPE defaults – Spanish transactions do not usually embed SPE defaults. Actually, pay - ment default is usually not observed and, therefore, an interest payment default simply leads to an accumulation in the next payment date (without default interest). At the SPE lev - el, most of the early redemption triggers are linked with ad hoc calls such as the clean-up call, the tax call and the regulatory call. How - ever, it is possible to include tailor-made calls, depending on the needs of the seller (such as a green call or a random repurchase call). • Management company defaults – manage - ment companies are bound by certain opera - tional defaults established in the Spanish Securitisation Law, related to their legal status and compliance with legal covenants. If the defaults are not cured within a statutory period, the documentation always replicates the replacement procedure established in the Spanish Securitisation Law. • Seller defaults – as described in 3.2 Principal Warranties , the seller is bound by certain
asset representations, which can have the effect of triggering the seller’s liability. • Servicers’ defaults – the paying agent, the account bank, the hedge provider, the servic - er, etc, are bound by certain defaults in their respective documentation. For instance, in the case of the account bank, a rating down - grade event is the most common type of default that triggers a replacement procedure. 3.7 Principal Indemnities The very concept of “indemnity” is alien to the continental legal systems. However, the place - ment agreement executed between the seller, the SPE and the placement agents occasion - ally includes a number of indemnities due to the influence of English law, limited to the compli - ance of the selling restrictions in the context of the placement activity of the placement agents. 3.8 Bonds/Notes/Securities As described in 1.2 Structures Relating to Financial Assets , one of the structural drivers is the difference between a private transaction and a public transaction. The notes are usually rep - resented as book entries in Iberclear, although listing differs as follows. • Public securitisation – a prospectus must be filed with the CNMV drawn under the Pro - spectus Regulation, and the notes are usu - ally listed in the Spanish regulated market for fixed income securities (AIAF). • Private securitisation – no prospectus is needed as the notes are listed in a multilateral trading facility. The most usual venues are the Spanish MARF, the Vienna MTF and Dublin MTF. On certain occasions, the transaction can be structured without book entries, but with the note represented in a physical security.
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