SECURITIZATION IN CURACAO

July 25, 2011 5:11 PM

Curacaoan special purpose vehicles are commonly used in cross–border financing transactions

Curacaoan special purpose vehicles (SPVs) are commonly used in both cross–border financing transactions as well as in Curacao domestic financing transactions.

As far as cross–border transactions are concerned, (synthetic and cash) securitizations, repackagings, collateralized debt obligations (CDOs), collateralized loan obligations (CLOs), leasing transactions, MTN and other note issuance programs are among the most popular transactions involving a Curacao SPV.

There are a number of reasons that make Curacao an attractive jurisdiction in which to set up SPVs in structured financing transactions. The first of these is the favorable Curacaoan tax regime.

Investor considerations also often drive the choice of SPV location. Curacao is a so called associate member of the EU, which makes a Curacao SPV attractive to European investors. Based on domestic regulations in their home country many European investors are precluded from, or restricted when investing in debt instruments issued by vehicles established outside the EU (such as the Cayman Islands and Jersey). Curacao, part of the Kingdom of the Netherlands, is also a member of the OECD. The jurisdiction of residence of the SPV has become an increasingly important issue that may seriously affect the sale of securities to regulated EU investors.

Also seen from a reputational perspective, certain investors are less comfortable with investing in a tax haven SPV than in an SPV incorporated in the EU or an associate member state of the EU.

During recent years Curacao has solidified its reputation as a particularly attractive jurisdiction for setting up securitization vehicles.

Karel Frielink
Attorney (lawyer) / Partner

24 July 2011

Karel's Legal Blog