In three different rulings the Paris Court of Appeal has issued a final judgment - at least for the time being - in Coeur Défense. Given the creditor-friendly nature of the court's rulings, they will be welcomed by participants in the real estate and structured finance markets.
France is examining the creation of a new refinancing instrument for banks: covered bonds based on guaranteed loans instead of mortgages. The draft on the new refinancing instrument is due to be submitted to Parliament in early 2010 and the first issue of covered bonds backed by guaranteed loans is expected in the second quarter of 2010.
Two landmark developments in securitization and structured finance have recently taken place: an attempt at introducing provisions to facilitate Islamic finance - in particular, sukuk - and developments in litigation concerning commercial mortgage-backed securities.
The government is looking to enhance Islamic finance and more specifically the issue of sukuk (Islamic asset-backed securities). France has already taken steps in favour of Islamic finance - the stock exchange regulator has published a recommendation on the listing of sukuk on Euronext Paris regarding the set-up and distribution of Islamic financial products, such as Sharia-compliant collective investment schemes.
The government has made revisions to the securitization legislation which set out to amend the law governing the activities and supervision of reinsurance companies and to reform the legal framework of the French mutual debt fund by providing greater security to securitization transactions, increasing flexibility and transparency and creating a new enlarged French securitization vehicle.
Following Ordinance 2008-556, dated June 13 2008 and implementing the EU Reinsurance Directive, Decree 2008-711 was adopted on July 17 2008. It reforms the legal framework of the French special purpose securitization vehicle, the former debt mutual fund (fonds commun de créances).
A project to reform securitization is expected to become law this week. The reform is intended to implement the EU Reinsurance Directive and to secure operations in light of the sub-prime crisis. In particular, the reform project would allow the securitization of insurance risk.