Not all the consequences of the recent Spectrum Plus ruling (see ASR, 10/10/05) on U.K. securitization have been worked out, but the case has produced a clear winner: the invoice finance or asset-backed lending market. This is the consensus from a survey which securitization specialist Demica conducted among the leading commercial U.K. lawyers on the impact of the decision of National Westminster Bank plc v Spectrum Plus Lt.

Among the lawyers participating, 90% of respondents believed that the case would lead to banks lending more frequently through invoice financing - be it factoring, invoice discounting or ABS. It is unlikely that asset-based lending itself will replace much of the current ABS volume since, in terms of scale, the former is an option more favoured by smaller companies, whereas ABS is only viable at the very top end of the scale, due to the huge structuring costs required, explained Phillip Kerle, CEO of Demica.

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