The Spanish market for secured non-performing loans (NPLs) is one of the largest and most active markets in Europe and Spain remains a preferred jurisdiction for international investors. Although for a number of years most portfolio disposals have been structured as a direct sale of secured NPLs, we are starting to see a number of transactions being launched in the Spanish market consisting of large portfolios of performing or reperforming mortgage loans which are sold to investors pursuant to Spanish securitisation techniques.
In fact, the market expectation is that the disposal of performing and re-performing secured loan portfolios will become increasingly common in Spain. The use of a Spanish securitisation fund (fondo de titulización or "FT") remains common and is a helpful tool particularly from a tax structuring perspective. However, some investors are seeing advantages in acquiring such portfolios using English law financing techniques, or with an eye to their subsequent cross-border securitisation under English law, through a special purpose issuer vehicle resident elsewhere in the EU. Regardless of the form of the acquiring vehicles, for mortgage loan portfolios in particular the nature of the instruments used to transfer the economic interest in the mortgage loans gives rise to a number of specific challenges and features, which we explain overleaf.