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SECURITISATION & DEBT CAPITAL MARKETS FORUM

SECURITISATION & DEBT CAPITAL MARKETS FORUM. A Presentation by Atiq Anjarwalla 29 – 30 OCTOBER, 2007 CAPE TOWN, SOUTH AFRICA. SECURITISATION TRANSACTIONS: CHALLENGES IN EAST AFRICA. INTEREST RATES.

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SECURITISATION & DEBT CAPITAL MARKETS FORUM

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  1. SECURITISATION & DEBT CAPITAL MARKETS FORUM A Presentation by Atiq Anjarwalla 29 – 30 OCTOBER, 2007 CAPE TOWN, SOUTH AFRICA

  2. SECURITISATION TRANSACTIONS: CHALLENGES IN EAST AFRICA

  3. INTEREST RATES • Sensitivity of transaction to ascertainable income flow and matching of SPV’s income and payment obligations. • Section 44 of the Banking Act - Kenya. • Amendments to Banking Act in Kenya – “in duplum” rule. • Banking and Financial Institutions Act in Tanzania –Section 49 (3). • Interpretation by courts of provisions permitting variations in interest rates. • Consider in each country the statutory regime that controls the charging of interest. • Default interest – risk of being classified as a penalty.

  4. REGULATORY REGIME IN KENYA • Efforts by CMA to develop regulations. • Risk of “over kill” by regulators vis a vis flexibility of common law. • Industry to push Governments to create enabling regulatory regime.

  5. ENFORCEMENT ISSUES 1. Practical hurdles to enforcement of security documents: • slow pace of judiciary – significant differences in African countries. • ability of borrower to obtain injunctive relief. • lack of consistency in judicial decision making. • multiple title deeds. • Corruption.

  6. 2. Unique legal issues relative to enforcing security over land: • statutory notices, auctioneers notice, valuations and timing. • agricultural land – involvement of local administration. • statutory power of sale is effectively no longer a non-judicial process in certain countries. • Tanzanian issues: • A court order required before taking possession of a dwelling home. • Spousal consent is required for a mortgage created over a matrimonial home to be valid.

  7. 3. Consideration to be given to exclusion from the mortgage portfolio of certain categories of mortgages. 4. Cost of due diligence of mortgage portfolio.

  8. STAMP DUTY AND OTHER TAXES • Application in connection with transaction documents. • Implications on the costs of doing the deal. • Current exemptions and further proposed exemptions in Kenya. • Position in other countries. Consideration to be given to follow Kenyan route. • Capital Gains Tax and Value Added Tax. • Industry lobbying as stamp duty liability may “kill” the deal.

  9. REGISTRATION • View of regulators in relation to perfection of SPV ownership rights. • Bureaucratic delays and registration cost. • Practical difficulties connected with registration.

  10. OTHER ISSUES • Rights of transfer and assignment in documentation. Industry practice not developed. • Banks and confidentiality. Waiver of rights of confidentiality. • Further education and capacity building.

  11. END

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