Anticipated legal changes that facilitate synthetic securitizations under Spanish regulations are finally underway. An official amendment introduces, for the first time, rules regarding synthetic securitizations of loans and other credit rights. This was published in the Spanish Official Gazette. The new law entered into force at the beginning of the year.
So far, the market has seen synthetics from only two Spanish banks - Caja Madrid's Cibeles deal and Santander Central Hispano's Hesperic deal. Neither deal has been completed with an on-shore SPV, as the banks must employ offshore vehicles to ensure regulatory capital relief. The latest deal revealed the potentially large appetite in the Spanish market for such products, which encouraged the government to enact the proper legislation for domestic synthetic securitizations through Spanish vehicles.