0000001512 00000 n For such originators — and London City Airport was one of them — the use of “whole business” securitizations is more appropriate. Its US$410m whole-business securitisation, called HONK 2015-1, is IFR’s US Structured Finance Issue of the Year because it threw open the doors to lower-cost, repeatable funding that previously was reserved only for the nation’s biggest fast-food restaurants. Whole business securitisation after the fall The market impact of the sub-prime crisis has This article aims to provide a brief history of the Punch Taverns group, a summary of its whole-business securitisation structures and to describe the events … In a recent transaction, key operating companies of the Tussaud Group granted mortgages over the shares of companies located in markets where direct security was not possible together with covenants to ensure that such “downstream” companies did not incur debts or grant security over or dispose of their assets. Given the importance of whole business securitization techniques for project finance, this article examines the background to such transactions generally and the London City Airport transaction in particular. Our whole business securitisation comprises around £1.66 billion of debt as at October 2019 in the form of tradeable, listed bonds secured over the assets and cashflow of the majority of the business. Lehman Brothers Asset-Backed Securities Index: A fixed-income index that focuses on asset-backed securities. A whole business securitisation (WBS) may be likened to a securitised LBO – that is, it is the value of a business, reflected by the residual cashflows of the business, which is being securitised here. In particular, the article covers the originator, the SPV, the securities, transferring the receivables, security and risk issues, cash flow in the structure, the role of the rating agencies, regulatory issues, and tax issues. To grant the loan, the SPV uses proceeds of bonds issued into the capital markets where- by the company grants security over most of its assets in favour of the bondholders. Almost all securitizations require credit “enhancement” to cover the risk of underlying obligors in the pool defaulting. whole-business securitization requires extensive legal and rating-agency structuring. Another popular technique is for the seller to buy a junior tranche of marketable securities subordinate to the securities issued to the purchaser. To date, the whole business securitization technique has been mainly used as an important refinancing tool — primarily for acquisition financings. Securitization is a financial arrangement that consists of issuing securities that are backed by a pool of assets, in most cases debt. Fourth, it enables assets to be matched with liabilities. The whole business securitisation technique uses a variant of the concept of a secured loan rather than a true sale structure (Davidson et al, 2003, pp. (The bank debt market would only look at 3–5 years floating rate finance.). Compliance with applicable accounting rules is necessary if off-balance sheet treatment is required. Please upgrade your browser to improve your experience. A whole business securitization is a finance method backed by cash flows generated from “business” itself (or sometimes including cash flows generated from asset sale, etc.) Abstract One of the latest innovations within the securitization field is whole business securitization. As with other securities issues, asset-backed securities may take the form of an individual offering where all investors own, pro rata, incoming revenues from the securitized assets or a multi-tranche offering in which different classes or tranches of securities are issued carrying different rights to the asset pool. Securitisation of a proportion of our managed and tenanted estate. More recently, U.S. corporate securitization techniques started expanding to other businesses in which intangible assets such as … Credit enhancement is usually provided by the seller, rather than a third party, and usually through reserves of assets rather than direct recourse. Whole business securitization is a transaction structure used in countries with creditor-friendly bankruptcy regimes more friendly than the United States's regime. 0000001706 00000 n Whole Business Securitization Introduction 1 Securitization vehicle, also called a special purpose vehicle, established only for the purpose of a specifi c securitization and legally diff erent and independent from the original owner of the assets. But investors should be aware that deals aren t always legally watertight. xref Acted on the whole business securitisation of Odeon’s UK cinema operating business, acting for Odeon – the largest cinema operator in the UK ; Represented Annington Homes on the refinancing of its portfolio of Ministry of Defence housing. In addition, a securitisation in the UK may be structured as a secured loan – for example, in a whole business securitisation or a commercial real estate securitisation (CMBS). Here, the cash flows derive not from the repayment of debt or other pre-contracted cash flows or receivables but from the entire range of operating revenues generated by a whole business. An automatic stay on security enforcement can apply on the appointment of an administrator, and the administrator can dispose of assets charged to other creditors whether under fixed or floating charges. Banks also need to charge for credit risk and, in the context of project finance, project risk. For more information related to these transactions, please refer to Fitch's UK Whole Business Securitisation Rating Criteria. An important example of this was the October 1999 issue by London City Airport of £100 million 7.886% senior secured notes due 2021 in order to finance its activities. Capital markets financing is less expensive and more flexible than bank finance. Whole-business … 0 Such a technique allows to finance or refinance operating assets of the company. More adaptations of the whole business securitization structure will certainly follow as the pace of international securitization increases and as originators in securitizable industries or sectors come to recognize the need to finance their businesses through the capital markets to ensure they are not at a competitive disadvantage. Whole business securitization, also called franchise royalty securitization, first appeared in 2006 and 2007, allowing franchise-based businesses to effect a complete makeover of their capital structure. Whole business securitization, also called franchise royalty securitization, first appeared in 2006 and 2007, allowing franchise-based businesses to effect a complete makeover of their capital structure. That doesn t mean securitisation doesn t work full stop. 0000002161 00000 n related. The objective of this paper is to identify current problems and propose legal and regulatory reforms to Colombia's securitisation framework that would enhance e ... To reach that, an analysis of the securitisation legal structure in the UK and in Colombia is done, focusing in the underlying secured transactions. The Securitisation Regulation bans them altogether, subject to grandfathering (securitisations outstanding before January 1, 2019 are exempt) and limited carve-outs (such as ABCP structures). At a minimum, rating agencies require floating charges to be included in the security package for a “whole business” securitization. Five specific Whole Business Thu 20 Feb, 2020 - 10:37 AM ET Fitch Ratings-Chicago-20 February 2020: Securitizations backed by Proved Developed Producing (PDP) securitizations have a certain … In this regard, the term and regularity of payment of the asset pool will be a deal driver as will the credit quality of the pool. @��L��:1/:;�h��@�)��YO'.t���$�4ii��k�f'6��*̩2��Z��!���/��f�+r '&����*i��޴t�6��;�n�9p����y%��؂�l~�tz�ܩpl�V�Ng�ab9�1�����W�]���� 1G��D*���k�1/o�o����9ag�XH��jWP.�ŭ��k�—�m]�.ɯ�.�R,�xH��V�V9������|2�o���J��x`Ftt�C��444--�c``RRJ� ��P �(`qq �ѓ�0 The rating agencies do so after focusing on the quality of the pooled assets and key factors such as asset isolation and credit and liquidity enhancement before ascribing a rating to a deal. With this growth has also come another feature: innovative securitization structures have been developed outside the United States, based on local legal concepts, that enable whole businesses rather than isolated receivables to be securitized. Second, securitization can provide balance-sheet relief through the removal of securitized assets and corresponding funding liabilities from the balance sheet of the originator (thereby improving capital adequacy ratios in particular for financial institutions and reporting ratios, such as debt-to-equity ratios and return-on-assets ratios). The £572 million refinancing of the deal was again launched as a conduit CMBS opco/propco structure… Legal issues to be considered include compliance with securities laws and laws governing conduct of investment activities. In 1999, global ABS issuance reached $198.8 billion (despite concerns about Y2K and interest rate hikes). 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