With the Global Distribution Conference of the Luxembourg association of investment funds (Alfi) taking place this week (September 20-21), David Sarfas, country head of Luxembourg, Intertrust Group, writes about the growing demand from Ucits managers for securitisations.
It is hard to assess current trends and demand in securitisation market during such unprecedented financial markets conditions and, moreover, to forecast expectations for the coming months. The new Luxembourg securitisation law, which came into force on 8 March 2022, will help to boost Luxembourg’s attractiveness on the global stage as a key jurisdiction for securitisations and become one of the most attractive securitisation hubs for Ucits fund managers, private equity firms and financial institutions.
Nevertheless, high inflation, energy crisis, and pressure on interest rates, represent significant challenges for investment managers and other market players, which are causing visible delays of trades on the markets.
Despite such challenges, we should remain optimistic that securitisation in Luxembourg will remain a demanded and attractive tool of financing for investment managers.
The main reasons for such expected growing demand are due to the key modifications introduced by the new Luxembourg law. One of which is the possibility today for investment managers to actively manage in Luxembourg CLOs or CDOs structures which will promote the set-up of actively managed CDOs and CLOs in Luxembourg. As a result, we expect to see Luxembourg attracting even more of these structures and some active debt funds deciding to consolidate and relocate their existing CLO activity to Luxembourg.
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