Utility and Rail Transactions to Lead European Securitization Issuance

Deals in the utility and transport sector will help push European corporate securitization issuance to record levels in 2004, according to a report by Standard & Poor’s. ‘We expect utilities and transportation, especially railways and toll roads, to be the dominant asset classes in 2004, though new classes will certainly emerge too,’ said credit analyst Pascal Bernous, a director in Standard & Poor’s Corporate Securitization group in London. Asset classes offering the greatest potential for future securitizations include telecoms, commodities, rail, airports, nursing homes, and hospitals, Bernous said. To date there have been corporate securitizations of 19 asset types, which include, besides those listed above, forestlands, metals, funeral services, and electricity transmission. In the year to the end of November, European rated corporate securitization issuance aggregated over £12 billion in 14 transactions. Despite strong issuance in 2003, insolvency regimes in some parts of Europe continue to limit the development of this type of financing. ‘Most corporate securitizations will likely come out of the U.K. next year,’ said Elena Folkerts-Landau, a director in the Corporate Securitization group. ‘Insolvency regimes elsewhere in Europe tend to present significant challenges to Standard & Poor’s requirement for structures that give noteholders true control over the assets in the event of an insolvency of an entity connected to the transaction,’ she added.


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