Industry players have for sometime expressed interest in new insolvency legislation due to take effect over the next year in Spain and Italy. They are hoping that it could facilitate the use of corporate securitization structures. However, market optimism could be dampened by the latest talk that the new legislation may not be as bondholder-friendly as expected.

On the corporate side, Spain has already seen corporate-style deals for its flagship airline Iberia, which launched a series of equipment enhanced trust certificates (EETCs). However, despite this, insolvency legislation is still hindering the use of U.K.-styled hybrid, whole-business deals. Nonetheless, market participants have been optimistic about the strong desire from Spanish corporates to securitize their account receivables through bond issuance. According to a Merrill Lynch report published earlier this year on municipal and government-backed securitizations, Spain has talked heavily about the possibility of securitizing its utility sector.

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