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Wednesday, 17th April 2024
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Developing the industry Back  
In a time of global uncertainty, financial services innovation continues to push forward. It will be the key to success in the recovery when it comes.
Developing the industry
In a time of global uncertainty, financial services innovation continues to push forward. It will be the key to success in the recovery when it comes.

In this month’s issue we report on a number of developments in the industry, notably in the structured finance sector.

While there has been much debate of late as to the viability of long-term public private partnership (PPPs) programmes, with evidence of the success of such programmes based on the UK’s experience not wholly convincing, the closing of Ireland’s second PPP project must be welcomed. The €51.3 million project, which will result in a state of the art National Maritime training facility in Ringaskiddy, Co. Cork, will help develop Ireland’s marine infrastructure, which is in danger of severely lagging behind its European counterparts.

Financed by ninety per cent debt and ten per cent equity, the project, which follows on from the first €81 million PPP contract, which was closed early last year, is expected to be followed by the signing of a major road project later this year.

Key to the development and success of this busy sector, which currently has around 40 projects at various stages of procurement, will be the role of the National Development Finance Agency (NDFA), a vehicle whereby money is borrowed from the private sector and invested in National Development Plan projects.

Securitisation
In the Finance Bill 2003, which is currently at committee stage, a number of changes have been made to modernise the framework for securitisation in Ireland. These changes should result in Ireland further bolstering its position as a leading global player in the securitisation market as it will enable transactions such as synthetics and CDOs/CLOs, business that Ireland has been losing out on to date, be conducted in Ireland.

Covered bonds
Another development in the past month was the issuance of the first Irish covered bond. The €4 billion bond was spectacularly launched by DEFPA, and it paves the way for the development of this new sector in Irish financial services.

WestLB, the German landesbank, is expected to be the next issuer to launch an Asset Covered Security (ACS) and industry sources suggest that a number of other foreign banks in Dublin are currently considering issuing themselves.

As for the Irish mortgage institutions who would also qualify to issue ACS, time will tell whether or not they deem the new bond to be suitable for their needs.

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