On January 1, 2019, the new STS regime came into force creating a new kind of securitisation: the “simple, transparent and standardised securitisation” or “STS securitisation” benefiting from regulatory advantages over non-STS securitisations.
To be able to obtain STS status though, a securitisation needs to meet a long list of criteria. Some are complex and not always straightforward to analyse. Recognising that transitioning from current market practice to the new STS regime may pose legal, structural, informational and IT challenges to issuers and investors, PCS is seeking to do as much as it can to assist. With this in mind, PCS will provide – upon request of any market participant – an STS Reports in respect of securitisations presented to it. In particular, we recognise that certain originators or sponsors may wish to have the benefit of an analysis of the STS criteria before launching into their first fully STS transaction. In effect, originators may wish to have a “dry run”.
The STS Report will provide this “dry run” by analysing a transaction to determine whether and to what extent such transaction could achieve STS status.
In addition, PCS will also, if so requested, analyse a securitisation against the additional criteria that a securitisation able to obtain STS status would need to meet either to be able to benefit from the lower capital requirements set out in the Capital Requirements Regulation were it held by European Union banks (a CRR Report).
When assessing a transaction for an STS Report, PCS will use the same approach and interpretations as it does when it does an STS verification or a CRR assessment. However, the procedure may be less thorough as the originator and PCS may agree as to the scope of items that the originator wishes PCS to check.
An STS Report is not a guarantee that a transaction would be considered to be STS by any regulator. We strongly advise that potential originators, sponsors or investors read our disclaimer and our Terms & Conditions.
To avoid unmanageable conflicts of interest, PCS will not provide an STS Verification under the STS Regulation in respect of any transaction for which any company in the PCS group has previously provided an STS Report.
Please, fill in the form below to join our mailing list and receive updates on the PCS news items.