Insolvency Key to European Securitizations Ratings

Standard & Poor’s has outlined how the conditions for originating and rating corporate securitizations in Europe are affected by a jurisdiction’s treatment of insolvency. ‘The secured debt structure of most corporate securitizations requires Standard & Poor’s to rate the transaction through insolvency,’ said Dominic Crawley, vice president at Standard & Poor’s Credit Market Services group in London. ‘As a result, the effect of insolvency legislation on the transaction structure and the structure’s ability to withstand challenges from the courts before and during any insolvency proceedings are key rating considerations.’ Crawley explained that the relative rights of secured and unsecured creditors are greatly influenced by the insolvency regimes of individual European countries, together with their respective security and contract law structures.

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