Derivatives and capital markets products

Structure

Securitisations are not regulated by any specific legislation and their structures are largely tax driven. If the securities are to be listed on the London Stock Exchange (or another exchange), the relevant listing rules will apply.

Key features are:

1. •

   the originator (debtor company) assigns the receivables to a newly-created SPV

2. •

   the SPV only has a contractual relationship with the originator

3. •

   the SPV issues various tranches of bonds/notes to various capital markets investors (bondholders/noteholders). The rating of the bonds/notes may be increased by obtaining credit enhancement (eg letters of credit, credit default swaps or monoline insurance, though this is less common post-credit crunch)

4. •

   the money raised by the bond/note issuance