SIC 12 An accounting interpretation by the International Accounting Standards Board whereby SPVs which are supported or credit-enhanced
3. Increasing use of arbitrage vehicles
Synthetic CDOs are increasingly used in developed markets. We are of the opinion that over time CDOs will be intensively used in the emerging markets
186 Securitization: The Financial Instrument of the Future
as well. In addition, as the synthetic technology provides a convenient alter- native to trading in credits, the use of synthetics as arbitrage vehicles will increase.
Notes
1 The information about various markets in this chapter is mostly based on secondary sources, primarily the Internet. Several of the author’s colleagues have, over time, compiled this information. Part of this information may have become dated. Besides, we have relied upon the sources, quoted at relevant places. The author invites read- ers to help him know more about the markets that the readers may know better.
Another good source of updates for various countries is the author’s website: http://
vinodkothari.com/secrep.htm
2 Author’s estimate, taking into account U.S. and European data and ballpark fig- ures of Asian and Latin American activity.
3 By Meir Kohn, Department of Economics, Dartmouth College 4 See <http://securitizationtax.com/supplement_5.pdf>
5 See Martin Fingerhut’s “Canada’s ABS Market Comes of Age” at the International Financial Law Review site http://www.iflr.com/?Page=17&ISS=17633&SID=524596 last visited July 12, 2005.
6 This is apparently comparable to the US FIN 46R – see chapter on Accounting.
7 See chapter on Legal Issues.
8 See European Securitization Forum Data Report Winter 2005
9 Exploring the reasons why the U.K. has experimented with so many different inno- vative applications, Hilda Mak and John Deacon in an article titled Developments in U.K. Securitization observe the reason lies in a stagnant mortgage market during the early 1990s, as a result of a general downturn in the mortgage business, by which securitization could not progress in its traditional mainstay – RMBS.
10 See ESF 2005 report supra.
11 For a further discussion on pfandbriefs, and the German pfandbrief law, see Chapter 12 on RMBS.
12 See the website of the true sale initiative at http://www.true-sale-international.de.
Also, “Germany-yet to catch up in securitization,” by Nina Siedler, Peter Jark, and Robert Hofbauer, Luter Rechtsanwaltsgesellschaft mbH, in Global Securitization Review2005/2006 Euromoney Yearbooks pg 103.
13 The website of the Department of Treasury contains a separate section on securi- tization, gives presentations, offers documents and investor reports for trans- actions. See http://www.dt.tesoro.it/ENGLISH-VE/Securitisa/index.htm, last visited December 28, 2005.
14 For materials on Italian securitization law, see Vinod Kothari’s website at: http://
vinodkothari.com/secitaly.htm.
15 See New Horizons for the Italian Securitization Market by Patrizio Messina, of Orrick, Herrington & Sutcliffe 2004. Published in the “Global Securitization and Structured Finance 2004” pg. 333.
16 Article 2447 BIS letter (a).
17 See, Changes in the Italian securitization legislation-new provisions on covered bonds. Umberto Mauro and Giuseppe Schiavello, Macchi di Cellere Gangemi.
Global Securitization Review pg. 143. Also Italian Securitization Law, by Freshfields Bruckhauseringer, October 2005.
18 See, Daphne Brinkhius” The Dutch Securitization Market and Developments of the Legal Framework”; Global Securitization Review 2005-2006, Euromoney Yearbooks pg. 120.
19 As to meaning of obligor notification and implications of not giving such notice, see the chapter on Legal Issues.
20 Based on the article byXavier de Kergommeaux and Gilles Saint Marc.
21 See, Herve Touraine and Fabrico Grillo: Overview of the French Securitization Market: Recent Innovations and Market Trends, Global Securitization and Struc- tured Finance 2004. Also, see Jean-Norbert Pontier: The Recent Changes in the French Securitization Regulatory Framework, at www.vinodkothari.com/french_
securitization_law.htm.
22 Ivan Peeters “Changes in the Belgian Legal Framework for Securitization”
Freshfields Briefing, May 2005.
23 Partly based on article by Miguel Castro Pereira and Inês Batalha Mendes.
24 See Paula Gomes Freire and André Figueiredo: Portugal ready to embrace new asset classes, Securitization Guideby IFLR.
25 See Supra.
26 Some useful information about Spanish securitization market in an article by Pablo Antolin, published in World Securitization News and Comment, June 1999.
27 See chapter on Legal Issues.
28 See Article by Íủigo Berrớcano and Alejandro de Muns from Linklaters available on www. globalsecurtisation.com.
29 See Mattias Lampe, Olof Stenstrửm and Christian Swartling: Securitization and Covered Bonds in Sweden, at www.globalsecuritization.com
30 Based on a paper entitled “Structuring Securitization Structures in Luxembourg by PwC available at www.vinodkothari.com.
31 Based on an article by Ahmed Pekin, Senior Partner, Fethi Pekin, Partner and Melis Cosan Baban.
32 Based on a Fitch Report, December 2002.
33 Based on an article by Michal Dlouhy, Petr Kuhn and Jan Vild.
34 Based on an article by Bela Deri.
35 Paul Sass, head of structured finance at OTP Bank, as quoted in The Banker.
Available at www.thebanker.com/news/fullstory.php/aid/453/Securitization_
gives_food_for_thought.html>.
36 Boris A. Otto of Thacher Proffitt: Asset Securitization in Mexico, Global Securitization Review2005-2006 pg. 169 quoting Fitch report(supra).
37 See &P: Recent Securitization conference highlights rise of Mexico Plus Brazil’s Expected Comeback, May 24, 2005.
38 S&P: Recent Securitization conference highlights rise of Mexico Plus Brazil’s Expected Comeback, May 24, 2005.
39 S&P: Recent Securitization conference highlights rise of Mexico Plus Brazil’s Expected Comeback, dated May 24, 2005 available at www.standardandpoor.
com/ratingsdirect.
40 See S&P report supra and chapter on Brazil in the International Comparative Legal Guide to Securitization 200” available from www.securitization.net.
41 Based in part on International Structured Finance – Securitization in Japan: Special Report by Shinsei Bank, Japan.
42 See Moody’s Reports: Japan’s 2004 Securitization Market Grew To At Least
¥6.5 Trillion.
43 See, Fitch Report at www.fitchratings.com.
44 See, Toshifumi Ueda: A Legal Review of the Japanese Securitization Market:
Overview of the Recent Legislation, “Global Securitization Review, published by Euromoney, 2005-2006 pg 193.
45 For details please see the website at <http://www.hklink2004.com.hk/eng/>
46 See KPMG Financial Reporting Update October 2005, issue 27 available from KPMG’s Hong Kong website. For the text of the amendment please visit www.
info.gov.hk.
47 See Reforms help Hong Kong Securitization, by Nicholas Chan and Susie Cheung: www.iflr.com/?Page=17&ISS=17633&SID=524604 →.
48 Partly based on an article by Chaipat Kamchadduskom.
49 See Generally, Stephen Jaggs and Matthew Waudby, Thai Structured Finance Renaissance?, “Published in 2005 Structured Finance Review available at www.iflr.com/?Page=17&ISS=17633&SID=524623–.
50 Based on Paul H. Brietzke – Securitization and Bankruptcy in Indonesia 51 Sarvar Ahmad, HSBC “Structured Capital Market in Asia”.
52 Based on Joong-hee Lee (Housing Finance International – March 2003).
53 For an excellent paper on NPL Securitization in China , see Johnny P. Chen Non Performing Loan Securitization in the People’s Republic of China, linked at www.vinodkothari.com/secchina.htm.
54 See China Takes Another Step Toward Financial Maturity,“ by William Pesek avail- able at <http://www.iht.com/articles/2005/09/19/bloomberg/sxpesek.php>.
55 ibid.
56 See www.vinodkothari.com/seclaw.htm for the text of the Guideline.
57 See Securitization in Taiwan by Adrienne Showering, Berkeley Cox, Angela Kwan and Andrew O’Shea at www.globalsecuritization.com on the Asia Pacific Link.
58 See Supra.
59 For a complete discussion on the law of securitization in India, see Vinod Kothari’s Securitization Asst Reconstruction and Enforcement of Security Interests.
60 See Update on Indian Structured Finance Market, July 2005 available on www.
vinodkothari.com/secindia.htm, and www.icraratings.com.
61 Partly based on article written by Ahmed H. Ghazli, an attorney with the law firm of Afridi, Shah & Minallah, Lahore.
62 See Najmus Saquib: The Study of Prospects of Asset-backed Securitization in Corporate Sector of Pakistan” available on the international section of www.secu- ritization.net.
63 Based in parts on Clayton Utz guide to Australian securitization market.
64 See Fabienne Michaux: Australian Securitization Update and Outlook, Global Securitization Review2005 pg 180.
65 See “Securitization in New Zealand-the search for the Holy Grail” by the law firm Buddlefindlay.
66 Synthetic CDOs: A Growing Market for Credit Derivatives: a special report by Fitch, February 6, 2001.
67 See news item on http://vinodkothari.com/secnewsjune01.htm.
188 Securitization: The Financial Instrument of the Future