Collateralised Debt Obligations, with an Overview of the Condor Securitisation Programme
Company and Securities Law Journal, Vol. 18, August 2000
Posted: 8 May 2001
This article explains the various types of Collateralised Debt Obligation (CDO) securitisations and provides an overview of "CONDOR" (Collateralised Originated Notes Diversified Obligor Revenues), a CDO securitisation programme established by Citibank in Australia, in late 1999. The article also discusses one of the major legal issues confronting securitisations in Australia: whether or not there has been a "true sale" of the securitised assets to the securitisation vehicle.
CONDOR has the ability to issue differentially-rated series of debt instruments against Australian government and corporate debt securities (including asset-backed securities), corporate loans, project finance loans, infrastructure finance loans, housing loans, trade receivables, auto receivables and other receivables. It is also authorised to implement synthetic securitisations of loans and other receivables.
Establishing that there has been a true sale of the assets being securitised to the securitisation vehicle is a necessary pre-condition to obtaining off-balance sheet treatment for those assets. In addition, where the securitised assets include loans, a true sale is required to ensure that the risk capital held against the loans is freed-up. This article examines the legal mechanisms for the sale of securitised assets in Australia, stamp duty-efficient sale structures, and the issue of whether notice of the sale must be given to the underlying obligors.
Keywords: Securitization, Collateralized Debt Obligations, Collateralized Loan Obligations, True Sale, Assignment
JEL Classification: G15, G21, G32, K22
Suggested Citation: Suggested Citation