FINLAND Trends and Developments Contributed by: Maria Lehtimäki, Waselius
Waselius Eteläesplanadi 24 A 00130 Helsinki Finland Tel: +358 9668 9520 Fax: +358 966 895 222 Email: info@waselius.fi Web: www.waselius.fi
The Introduction of Securitisation to Finland Almost as soon as it was first introduced to the USA and global markets, Finland embraced securitisation; similarly to the way it took to extreme winter sports and auto racing: boldly, head-on and with decent success. The first issu - ers of securitisation transactions in the markets were publicly sponsored. These transactions by municipal and government bodies were structured like private transactions, although it was common to have publicly guaranteed ele - ments, which resulted in very favourable ratings and rates on the senior tranches. Government- sponsored securitisation of social housing loans through the popular Fennica series was also one of the key tools used to rehabilitate the public balance sheet in preparation for Finland joining the European Monetary Union. These government-sponsored and municipal- sponsored deals were soon joined by private originators of financial assets ranging from trade receivables and corporate and consumer loans to whole businesses and paper and forest assets. Although deal volume and size did not rival those of larger economies, it can be said that the market was active from the early 1990s to late 2000s until the global financial crisis. However, bank originators were conspicuously
absent from that market, for reasons that are explained below. Post-Crash: The Lead into the Current Market Despite the dubious reputation of securitisation as the irresponsible instrument that caused the crash of 2008, securitisation next reared its head in the aftermath of that global financial crisis. As many former banking relationships had been through choppy waters and many of those ships had sunk without hope for meaningful salvage, traditional Nordic-style relationship banking held less sway and the borrower market was on the lookout for alternative and diversified sources of financing. Many non-bank lenders and corporates found an exciting opportunity to obtain funding at attrac - tive rates through private securitisation transac - tions, and in one case, an auto lender through a successful annual public asset-backed secu - ritisation (ABS) series that has continued for a decade. That series was joined in the market by another popular auto warehouse and ABS series, finessing the structure and issuing both private and public transactions even more fre - quently. Bank originators, however, were still nowhere to be seen.
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