CYPRUS Law and Practice Contributed by: Thanasis Korfiotis, Loizos Papacharalambous, Eleni Korfiotis and Georgia Charalambous, Koushos Korfiotis Papacharalambous LLC
2.2 Sponsors The role of the sponsor (the initiator of the financ - ing transaction) is normally held by another affiliate of the direct shareholder of the SPV (as defined in 1.2 Structures Relating to Financial Assets ). The sponsor is normally another Lux - embourg-registered entity and is the sole owner of the issuer. 2.3 Originators/Sellers The originator/seller under the Sale of Loans Law (as defined in 1.3 Applicable Laws and Regulations ) is the original lender that sells the loan portfolio (as defined in 1.1 Common Finan- cial Assets ), and which often participates in the securitisation as a lender. The originators in the securitisation transactions that occurred in rela - tion to legacy portfolios (as defined in 1.4 Special Purpose Entity (SPE) Jurisdiction ) were Cypriot banking institutions. In the secondary market of sale of legacy portfolios, the originators/sellers will primarily be credit-acquiring companies, as defined under the Sale of Loans Law. 2.4 Underwriters and Placement Agents Underwriters and replacement agents are nor - mally identified in the transaction documents under the term “arranger”, with said role nor - mally being held by financial institutions known worldwide that undertake the role to attract investors and assist in arranging the financing mechanics. It is not mandatory for an under - writer and replacement agent to be appointed. 2.5 Servicers The financial assets referred to in 1.1 Common Financial Assets are managed by credit servic - ers, which are authorised under the: • Sale of Loans Law (as defined in 1.3 Applica- ble Laws and Regulations ) for transactions that were held before 8 November 2024; and
was a requirement under the Sale of Loans Law (as defined in 1.3 Applicable Laws and Regula- tions ), which secures the transfer of a loan port - folio by imposing a rebuttable assumption on the transfer. This law also ensures the updating of public registries, without the imposition of any expenses. 1.5 Material Forms of Credit Enhancement The credit enhancement tools used in securiti - sation financing transactions normally include: • subordination between lenders (with the original lender having priority regarding the settlement of liability created through the loan portfolio transaction documents) through a waterfall debt repayment structure; and • collateralisation via share pledges over (i) the SPV holding the loan Portfolio (as defined in 1.1 Common Financial Assets ) and (ii) the subsidiaries that normally hold the immovable property assets obtained via the settlement of the debts of underlying debtors, and via assignment over the NPL portfolio receivables and charges over the bank accounts of the SPV. 2. Roles and Responsibilities of the Parties 2.1 Issuers The issuer is normally the person issuing notes, the proceeds of which are applied towards financing the acquisition of the SPV (as defined in 1.2 Structures Relating to Financial Assets ). The issuer is normally held by businesses that are regulated as securitisation vehicles under the relevant Luxembourg law and are affiliates of the direct shareholder of the SPV.
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