The European Union (EU) has ambitious plans for energy transition, infrastructure development, and technological innovation, which require substantial investments across various sectors. Public funding can support some of these aspirations. However, the total amount needed far exceeds what the EU and individual countries can provide, even with allocations such as the Recovery and Resilience Facility.
As a result, private funding will play a significant supporting role in delivering on European goals. The private financial activity sets the stage for continued growth of private securitisations in Europe. In working documents, the European Commission has specifically underscored the role of securitisation in funding these strategic priorities.1
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Growth of private issuance in EMEA
Market sentiment for structured finance issuance in the EU began 2024 on a positive note, with expectations for transactions to approach €100 billion for the year, according to S&P Global.5
While end-of-year data remains to be seen, 1H 2024 data shows signs of promise in both completed deals and the direction of our conversations with investors, banks, PE firms, and asset managers. We are seeing significant growth in both deals and prospects. Direct lending for the first half of the year was 40% higher than 1H 2023.6 By the third quarter of 2024, private equity-backed deal volumes in Europe, Middle East and Africa (EMEA) jumped 41% compared to the same period in 2023.7 While many deals remain private, they are also shaping the news headlines covering prominent transactions.
Regulatory shifts reshaping the market
To help drive a resurgence, the European Commission is exploring8 several significant reforms to revitalise the EU securitisation market as a counter to contraction while the market in the U.S. has grown. The proposed changes span multiple areas: simplifying due diligence requirements and making them more proportionate to transaction risks, streamlining transparency requirements, and redefining what constitutes a “public” securitisation.
On the capital front, regulators are considering reducing requirements through adjustments to risk weight floors and capital requirements. There is also a desire to soften the Simple, Transparent, Standardised (STS) framework. That framework was established to mitigate issues that contributed to the 2008 financial crisis. It allows lower capital requirements for more straightforward, less risky securitisations. Many in the industry believe these strictures can be loosened without reintroducing unnecessary risks.
Finally, the Commission is exploring the creation of a pan-European securitisation platform to standardise practices and possibly incorporate public guarantees. Such reforms focus on improving cross-border coordination of supervision. They could make securitisation more appealing for insurers and pension funds through adjusted capital requirements.
The net effect of such changes is to boost EU market competitiveness while maintaining appropriate safeguards for financial stability.
The role of data and servicing in a complex market
Data and servicing in Europe’s private securitisation market play an essential enabling role for structured finance to deliver on EU ambitions. Data has proliferated as transaction volumes grow and structures become more complex. Some of this data includes unstructured sources describing environmental or other ESG (i.e., social and governance) aspects of transactions.
European and UK regulatory frameworks have established stringent reporting standards that both originators and servicers must meet. While ensuring transparency, these requirements demand sophisticated data management capabilities and robust operational processes. As such, private markets present unique challenges in data gathering and standardisation. Market participants must often navigate fragmented information sources and varying reporting standards across jurisdictions, even as they handle higher transaction volumes.
Data quality and consistency requirements can be quite acute, particularly in cross-border transactions where multiple parties rely on timely, accurate information flows. The challenge intensifies when dealing with diverse asset types and multiple jurisdictions, each with their own reporting requirements and market practices.
Reorienting around data
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Looking ahead, our clients have expressed a wish list of industry needs. The industry would benefit from enhanced collaboration between market participants to streamline data sharing and reporting processes. Many are hoping for the development of common data standards, improved technological infrastructure, and more established best practices for cross-border information exchange.
For example, Cash Managers and Investor Reporting Agents (amongst other roles) work with both originators and investors to tailor investor reporting and analytics. Better stratification of data, such that asset portfolios can be scrutinized, cash flows and ROI assessed, helps ensure that an independent third party can monitor portfolio data and cascade both asset and liability information to appropriate deal counterparties.
In total, such improvements would not only benefit service providers but also enhance transparency for investors, ultimately contributing to market growth and efficiency.
Where next?
As European securitisation evolves to meet ambitious funding needs across energy, infrastructure, and technology, the industry stands ready to shift into forward drive. The European Commission’s proposed reforms could signal a welcome shift toward streamlined operations while maintaining prudent safeguards.
However, success requires more than regulatory change—it demands a coordinated effort from all market participants to build a more dynamic, efficient ecosystem underpinned by data and diligent service. If it succeeds, this new market paradigm will play a crucial role in funding Europe’s strategic priorities while enabling specific transactions to do so.
About the authors
Wilmington Trust through its Structured Finance business in Europe provides a range of services for facilitate both private and public securitisation, including:
Cash Management, Calculation Agent, SPV Corporate Administration, VFN or Facility & Paying Agent, Investor Reporting, Registrar, Security Agent, Structured Analytics and Trustee Services (inc. Data & Expectancy Rights Trustee, Note, Security, Share & Indenture)
To learn more, contact:
Alex Pashley, Head of Structured Finance, UK
Ian Hames, Senior Vice President, Sales, Europe
Caroline Magee, Senior Vice President, Sales, Europe
[1] “Targeted Consultation on the Functioning of the EU Securitisation Framework,” European Commission, October 2024.
[2] “Energy transition in the EU,” European Parliament Briefing, European Parliamentary Research Service, November 2023.
[3] “Investment in infrastructure in the EU,” European Parliament Briefing, European Parliamentary Research Service, October 2018
[4] “EU Artificial Intelligence Ambition,” European Court of Auditors, August 2024
[5] “European Structured Finance Outlook 2024: Pushing On Through,” S&P Global Ratings, January 2024
[6] “European Private Credit Review H1 24,” 9Fin, July 2024.
[7] “Dealmakers expect bigger European private equity buyouts and more of them,” Reuters, 22 October 2024.
[8] See “Targeted Consultation on the Functioning of the EU Securitisation Framework,” European Commission, October 2024.
Wilmington Trust’s domestic and international affiliates provide trust and agency services associated with restructurings and supporting companies through distressed situations.
Not all services are available through every domestic and international affiliate or in all jurisdictions. Services are available only to corporate and institutional clients, (i.e. Eligible Counterparties or Professional Clients as defined by applicable regulations) and not to Retail clients).
This article is intended to provide general information only and is not intended to provide specific investment, legal, tax, or accounting advice for any individual. Before acting on any information included in this article you should consult with your professional adviser or attorney. Facts and views presented in this report have not been reviewed by, and may not reflect information known to, or the opinions of professionals in other business areas of Wilmington Trust or M&T Bank. M&T Bank and Wilmington Trust have established information barriers between their various business groups.
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