Changes announced in the Finance Bill 2003 should see Ireland become a major player in the location of special purpose vehicles (SPVs) for securitisation transactions. Section 110, which sets out the taxation framework for securitisation in Ireland, has been modernised to enable Ireland to remain at the forefront of the industry.
Calling the amendments the most â€˜far-reaching yetâ€™, David Smyth, a partner with Ernst & Young, says that the new Finance Bill will bolster Irelandâ€™s position as player in the securitisation market, â€˜allowing Ireland to become a premier location for issuance of a whole range of securitisation transactions which may have gone elsewhere due to what was perceived as our â€˜inflexibleâ€™ regime.â€™
CDO/CLO transactions, which previously could not be facilitated in Ireland due to the multiplicity of originators/ original lenders in such deals, should now be relatively easy to facilitate. Similarly, synthetic securitisations should now be accommodated in Ireland.
This is good news for the industry, as business was being lost to other jurisdictions that have been more flexible than Ireland. Indeed Dublin-based Harbourmaster Capital Management recently launched a E1 billion synthetic CDO, and located the SPV in Jersey. Perhaps in future, such transactions may feature Dublin domiciled SPVs.
Other changes announced in the Bill include the removal of the distinction between IFSC and non-IFSC companies, so there is now only one type of qualifying company for the purposes of Section 110.