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Secure Performance, Secure Future

Performance and outlook for the trade receivables securitisation market in Europe – research amongst Europe’s top 30 banks

by Phillip Kerle, Chief Executive Officer, Demica

The demise of securitisation has often been mooted, and it is indeed true that many of the more exotic pre-financial-crisis instruments have disappeared, never to return.  However, a number of securitisation types, based on solid, high-quality assets, have not only weathered the storm, but look set for a revival and growth; one such is trade receivables securitisation (TRS).  This year has seen the Basel III rules on securitisations eased from their initial punitive levels,[1] a boost to all high quality asset securitisation classes. The evidence for a healthy interest in TRS can be found in a range of key analyses and initiatives in this area from the last 12 – 24 months[2].

Even though data from the ECB indicates a turning point for easing of commercial credit terms, and an uptick in demand, relationship lending across the regions remains lack-lustre, with indications of a shift in mindset towards alternative means of raising working capital, such as receivables finance.[3] Diversification of working capital sources seems to be the new flavour.