EU Nations Reach Draft Deal on Rules to Revive ABS Markets

EU nations have reached agreement among themselves on proposed rules for how to revive EU asset-backed securities markets, according to draft documents prepared for a Wednesday meeting in Brussels.

The deal, on course to be approved by national representatives, responds to the EU Commission’s September proposal. According to Nov. 30 documents posted on an EU website, the deal includes a section on how to handle capital treatment for some investors who retain senior positions on synthetic securitizations that are backed by loans to small and medium-sized enterprises, especially where there are ties to government or promotional bank guarantees.

For the proposal to be enacted, nations and the EU parliament must agree on a final version of the rule. If nations move forward with the draft agreement, it will pave the way for talks with the parliament once the legislature is ready on its end to proceed.

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