December 3-4, 2004 — Lebanese American University, School of Business, Irwin Hall, Beirut, Lebanon
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Asset securitization has revolutionized the field of finance. This flexible, efficient and low cost way of raising capital provides the opportunity for institutions to enhance liquidity, to generate income and to optimize the usage of capital. The asset side of the balance sheet offers many interesting features to develop high added value in emerging markets companies that can benefit from structured financing.
Three worldwide phenomena have major implications on developing countries as they engage in securitization.
The first is the ability through securitization to breach the sovereign ceiling of high country risk rating and hence to provide a lower cost of funding. Indeed in June 2001, Moody's announced that under certain conditions, emerging markets debt may not be constrained to the country ceiling.
Lebanese American University
The second is the expected impact that the Basel II agreement would have on the securitization product mix/originators and buyers of asset backed securities.
And the third is the effect of two International treaties adopted in late 2001, with an expected influence on operating assets securitizations, namely, the Unidroit Convention on International Interests in Mobile Equipment and the United Nations Convention on the Assignment of Receivables in International Trade.
In Lebanon, the Trust Law or “Fiduciary” law was enacted in 1996 enabling the case of bankruptcy-remote vehicles in securitization transactions. As a result, the transfer of assets can be done according to article 280 of the “Code of Obligations and Contracts” or based on the Financial Trust Law No. 520 of 1996 that deals with “Financial Markets Development and Fiduciary Contracts.”
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