The Swedish ministry of finance is set to introduce legal changes that will make it possible for Swedish securitizers to use onshore special purpose vehicles.
At present, SPVs incorporated in Sweden are treated as companies providing financial services, meaning that they must have a license to provide those services and a minimum capital of E5 million ($5.01 million).
The new legislation will grant securitization SPVs exemption from those requirements.
The Finance Ministry has invited comments on the proposal, which has been talked about since 1995 but is finally likely to make it into legislation in the next six months, said Frederik Mansson of Ohman, the Swedish securitization boutique.
“Our comments have obviously been in favor of the proposal, [but] there are considerations that are not solved, for instance, tax issues involved with profit extraction from SPVs,” Mansson said. “In real life structuring of deals there will be problems.”
He added that the most significant impact of the new proposals will be to demonstrate that the finance ministry now regards securitization as a respectable financing technique.
“Getting securitization to become an acceptable form of funding in Sweden is more of a psychological exercise. For example, to convince corporates and banks to take the risk of exporting credit assets, has been a sensitive issue,” he said.
Peter Fredell of Fredell & Co., another boutique securitization firm, agreed: “Nobody is going to use a Swedish SPV, including the Swedes. Swedish SPVs will be prohibitively expensive, because to incorporate them will need a lot of new legal opinions. The main value of the new law is that securitization will now be seen by corporates as a valid form of funding.”