Securitizations of loans to Spanish small and medium sized enterprises (SME) facing trouble on two fronts: rising corporate insolvencies and new legislation on debt refinancing and restructuring. In a recent report, Fitch Ratings said that a legislative reform that went into effect March 7 could inject uncertainty into the cash-flow and recovery expectations on SME loans, as the original repayment terms can be altered.

The new law makes it easier for bank creditors and troubled compies to come to an agreement before insolvency proceedings begin. For the agreement to go into effect it must have 51% support from the financial creditors and allow the company to remain viable. 

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