The Law aims to clarify and broaden the way a securitisation undertaking may finance the acquisition of the underlying assets.
First aspect: Modification of the term “securities” by “financial instruments”
The main reason for this change is to avoid any uncertainty as to the type of securities that can be used to finance a securitisation transaction and this would extend the range of instruments that can be issued by the securitisation undertaking (other than securities) such as warrants, future, options, etc…
Second aspect : Possibility to be “fully financed” or “partially financed”
Securitisation undertakings can now be either fully financed or partially financed (in complement to the issuance of financial instruments) by credit facilities. This means that they do no longer need be supplementary to the issuance of the securities, for either warehousing reasons or for short-term liquidity purposes.
By doing this, the legislator intend to create a broader definition of credit which would consist in any form of debt creating a reimbursement obligation for the securitisation undertaking.
With this amendment, Luxembourg law is aligned with the Securitisation Regulation which already permits financing through credit agreements.