FINLAND Law and Practice Contributed by: Maria Lehtimäki, Niklas Thibblin and Timo Lehtimäki, Waselius
• is within the EU, for reputational and stability reasons; • is well known to investors and rating agen - cies, for pricing reasons; • has specific securitisation legislation or other - wise suitable companies law and tax law and praxis, for legal opinion reasons; and • has a large selection of experienced and cost-efficient corporate services providers, for operational reasons. 1.5 Material Forms of Credit Enhancement It is common to combine different methods of credit enhancement – eg, subordination, over- collateralisation and cash reserves – in a man - ner that is proportionate to the transaction, so that the credit risk of the underlying assets is still overwhelmingly transferred to the SPE. An excessive use of credit enhancement may adversely impact the true sale assessment and off-balance sheet treatment. 2. Roles and Responsibilities of the Parties 2.1 Issuers The issuer is the SPE that issues the debt, usu - ally in the form of notes. The SPE’s role is lim - ited to purchasing the assets and issuing the debt to finance the purchase. The SPE does not have any employees and it does not conduct any other business activities beyond the secu - ritisation transaction. It is wound up when the transaction ends. 2.2 Sponsors Under the EU Securitisation Regulation, a spon - sor is a credit institution or an investment firm, other than an originator, that establishes and manages a securitisation transaction involving
purchase exposure from third-party entities. Finnish securitisation transactions are typically led by the originator and there is no sponsor. 2.3 Originators/Sellers The originator begins the entire transaction to obtain funding, manage capital or risk, or both. The originator engages all the other transaction parties to assist it in the transaction. The origina - tor typically has many additional roles, such as subordinated lender, servicer and risk retention holder. The originators in Finnish transactions are typically non-bank lenders (such as auto financing companies or unsecured consumer lenders financing their portfolios) or industrial companies (financing trade receivables) seek - ing to obtain funding on beneficial terms or at more competitive rates than would be possible through the bond markets or leveraged financ - ing. In the future, credit institutions are more likely to engage in securitisation for capital management purposes. This is driven by tight - ening capital requirements and because of the appearance of more precedents for these types of transactions in the market. 2.4 Underwriters and Placement Agents The main adviser in a Finnish securitisation trans - action is generally the arranger or lead manager, which usually (i) helps the originator engage all other advisers (including agent, trustee, cash manager, swap counterparty, legal advisers in all jurisdictions, corporate services provider, list - ing agent, rating agencies, verification agent and securitisation repository); (ii) structures the trans - action; and (iii) sells the transaction. In a public transaction, there is typically more than one such adviser, in which case they are called joint lead managers. In a private transac - tion, it is common for the arranger or its affiliate to also be the original noteholder or lender.
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