Sorainen advised the Lithuanian Ministry of Finance working in cooperation with the European Bank for Reconstruction and Development (EBRD) on implementing a project aimed at introducing covered bonds and securitisations in Lithuania, and providing a roadmap for the redrafting of relevant laws.
This project is one of the priorities set in the programme of the Lithuanian Government. It is dedicated to promoting development of Lithuanian capital markets by widening the spectrum of alternative financing sources.
This project, carried out by the Lithuanian Ministry of Finance and the EBRD, will result in creating a legal framework for new financial instruments. Institutional investors will be able to invest in these instruments and the possibilities of alternative financing will be widened. The project is expected to increase the efficiency of financial markets and perspectives for long-term growth. The draft law is expected to be prepared by the end of this year and to be adopted in 2018.
Sorainen lawyers in cooperation with international experts carried out a comprehensive analysis of existing legislation in addition to preparing a concept paper on covered bonds and securitization and introducing them in Lithuania.
Securitisation involves structured financing transaction during which a company separates one or several of its financial assets which it transfers to a special purpose vehicle that issues asset-backed securities. In this way new securities are generated to be offered to investors. This vehicle is often used by credit and financial institutions because it helps to free up capital and increases financing opportunities. This method is mostly used in the mortgage market, although it has eventually caught on in other markets such as credit cards and car purchase financing.