SWITZERLAND Trends and Developments Contributed by: Johannes Bürgi, Roger Amman, Lukas Wyss and Maurus Winzap, Walder Wyss Ltd
In the past phase of rising interest rates, yields on corporate and government bonds have generally increased and coupons on new issuances have tended to be higher compared to issuances per - formed during the negative or low interest envi - ronment. This held true not only for corporate bonds, but also for securitisation transactions and ABS. As a result of the demand for higher coupons, the financial modelling and structur - ing of new securitisations and ABS issuances had become more challenging, in particular for securitisations of income generating assets that originated in the low interest rate environment, with such pools of assets providing for relatively low yields compared to the increased funding costs under new issuances. With interest rates now falling again and the expectation of even further interest rate cuts in 2025, this situation is expected to ease. Therefore, the overall trend to lower interest rates is generally perceived to be favourable for covered bonds, securitisation transactions and ABS, giving Issuers a stable and reliable funding tool to refinance also in the future in the Swiss market. Legislation Currently Switzerland has not enacted any spe - cific primary legislation covering securitisation or covered bond transactions. Instead, securitisa - tion and covered bond transactions in Switzer - land have been developed and are structured under the general legal and regulatory frame - work available, such as the Swiss Code of Obli - gations (eg, relating to the formation of the SPV
and the transfer of receivables and assets), the Swiss Civil Code (eg, relating to security inter - ests), general capital market regulations and regulatory and tax laws. Likewise, Regulation (EU) 2017/2402 (the EU Securitisation Regula - tion), including its Article 6(1) relating to simple, transparent and standardised securitisations, has been neither adopted by Switzerland nor transposed into Swiss law. On 10 April 2024, the Swiss Federal Council adopted a report on banking stability following the analysis of the developments in connection with Credit Suisse Group AG. The report outlines 22 measures aimed at improving the supervi - sion and resolvability of Swiss systemically important banks for implementation and seven other measures to be examined in greater depth. One of the measures to be examined in greater depth is the introduction of covered bond spe - cific legislation in Switzerland. Whilst today it is unknown what will result from such examina - tion, whether covered bond legislation will be introduced in Switzerland at all and what form this would take, a formal legislative framework on certain specific aspects of covered bond (and securitisation) transactions in Switzerland would generally be positively perceived to fur - ther strengthen the instruments, lower its costs and thus potentially allow smaller market par - ticipants to make use of these instruments as a reliable source of funding.
436 CHAMBERS.COM
Powered by FlippingBook