Last Updated March 06, 2019

Law and Practice

Contributed By Homburger

Authors



Homburger A leading Swiss corporate law firm, Homburger advises and represents enterprises and entrepreneurs in all aspects of commercial law, including transactions, proceedings and complex cases in a domestic and global context. Homburger regularly advises originators, arrangers, trustees and rating agencies on the structuring and implementation of onshore and cross-border securitisation transactions, including 'true sale' and risk-weighted assets-driven transactions, withholding tax-neutral cross-border RMBS and ABS transactions, securitisation platforms/receivable sales programmes and synthetic securitisations (including CLOs and CDOs). The team has provided legal and tax advice on a number of benchmark transactions, including the first public cross-border auto lease ABS transaction in the Swiss market, the first two contractual covered bond programmes in Switzerland and transactions involving statutory covered bonds (Pfandbriefe).

A transaction structure that is frequently used is the combination of a (funded) credit default swap (CDS) and the issuance of credit-linked notes (CLNs). In such a structure, the protection buyer (eg, a bank holding a loan portfolio) purchases credit protection under a CDS from the protection seller (ie, the SPE). In the CDS documentation, certain events are defined in relation to the underlying portfolio held by the protection buyer that will trigger a compensation payment of the SPE under the CDS. The SPE in turn issues CLNs to investors. Issuance proceeds from the CLNs are deposited with a bank and/or invested in low-risk marketable securities to provide funding for a potential compensation payment under the CDS. As a consideration for the credit risk protection provided, the protection buyer pays a periodic premium under the CDS to the SPE, which is used by the SPE to meet interest payments due under the CLNs.

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Authors



Homburger A leading Swiss corporate law firm, Homburger advises and represents enterprises and entrepreneurs in all aspects of commercial law, including transactions, proceedings and complex cases in a domestic and global context. Homburger regularly advises originators, arrangers, trustees and rating agencies on the structuring and implementation of onshore and cross-border securitisation transactions, including 'true sale' and risk-weighted assets-driven transactions, withholding tax-neutral cross-border RMBS and ABS transactions, securitisation platforms/receivable sales programmes and synthetic securitisations (including CLOs and CDOs). The team has provided legal and tax advice on a number of benchmark transactions, including the first public cross-border auto lease ABS transaction in the Swiss market, the first two contractual covered bond programmes in Switzerland and transactions involving statutory covered bonds (Pfandbriefe).

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