The “Certified by True Sale International” label
The “Certified by True Sale International” label
1
High reporting standards for transparency and quality
It is two years since the outbreak of the sub-
3.Regulatory standards and procedures
prime crisis and the international securiti-
Basic standards have been established by
sation markets are still in a state of shock.
law and compliance with them is monitored
Many different analyses have found a sim-
by the commercial supervision or financial
ple explanation for the causes of the crisis:
supervision authorities.
large information asymmetries between
sellers and buyers open the door to moral
hazard. As the market economy has developed, the following procedures have evolved as ways of combating moral ­hazard:
1.Commitment to transparency and disclosure
On the basis of either statutory obligations
or official standards, sellers disclose the
main product contents and features as well
Note
as the production procedures.
Certification by True Sale International
GmbH does not constitute an offer or
a recommendation to buy, sell or hold
securities or unit certificates. It is based
on confirmation that, as of the date of the
information memorandum, the issuer has
undertaken to comply with the criteria
June 2009, are tackling these issues.
As long ago as in 2004, True Sale International GmbH (TSI) dealt with the first
two issues through its well-established
certification procedure for securitisation
transactions (“Certified by True Sale International”). Since then, 13 transactions have
been certified (August 2009), raising the level of transparency of German ABS issues
and making a positive contribution to the
In industry, joint standards are established
further development of the market.
for the main product features and production procedures, and compliance with them
is guaranteed by means of certification
The issuer has sole responsibility
using, for example, the DIN, TÜV or BIO
for using the “Certified by True Sale
Financial Services Round Table (EFR) in
2.Certification
governing the award of the TSI certificate.
­International” quality label appropriately.
Current initiatives, such as the European
label.
The “Certified by True Sale International” label
2
Objectives
Certification advantages
On the basis of defined quality standards
The advantages of certifying the senior
for investor reportings, the TSI certification
tranche of a transaction are:
process reduces information asymmetries
and ensures a sustained increase in the
transparency of securitisation transactions. The certification process focuses on
ABS in­vestors.
High quality reporting with extensive
information for ABS investors about
the development of the underlying loan
portfolio, of the ABS bonds and of the
rating of all parties concerned
Prompt, free access to the reports on
the TSI website
The offering circular is accessible to the
public on the TSI website; the presale
or new issue reports of the rating agencies concerned are also published
All TSI certified transactions to date are
eligible ECB collateral
A market making agreement has been
concluded for all certified transactions
Webpage of a TSI certified transaction (Driver Five, Originator: VW Bank)
The “Certified by True Sale International” label
Criteria and standards
3
Note
TSI‘s General Conditions of Certification,
its general recommendations for structuring the offering circular and details
The quality criteria for certification of the
senior tranche of the transactions are:
of the market making agreement can be
Compliance with specific criteria relat­
downloaded from our website
ing to the transaction structure and the
(www.true-sale-international.de).
SPV (see page 4)
Adherence to the structure
­recommended for the offering circular
A market making agreement for the
senior tranche of the transaction to
be certified must be concluded and
application must be made for a stock
market listing, this also being one of
the criteria making the securities ECB
eligible
Compliance with the investor reporting
standards drawn up by TSI and experts
from the banking industry (see page 5)
The originator‘s/servicer‘s willingness
to publish the investor reports promptly
on the TSI website
Acceptance of the General Conditions of
Certification and Annexes
The “Certified by True Sale International” label
4
Criteria for the transaction structure
and the SPV
The criteria which need to be fulfilled for
1.The general conditions applicable to TSI
the senior tranche to be certified differ de-
SPVs also apply to foreign SPVs, i.e.:
pending on whether the SPV has been established by TSI (German SPV) or has been
established abroad for tax reasons.
Criteria for German SPVs
The criteria for the transaction structure
and the SPVs are part of the legal framework of the TSI securitisation platform and
are fulfilled by all SPVs.
Criteria for foreign SPVs
The TSI certification process has been extend­
ed to include transactions with non-German
SPVs as – for tax reasons – leasing receiv­
ables, for example, cannot be processed via
German SPVs. For these transactions to be
certified by TSI, the following primary cri­teria
relating to the transaction structure and the
SPV were established by a TSI group of experts.
The transaction is based primarily
on German assets
The foreign SPV is located within the
European Union
No active asset management
The directors of the SPV are
­independent
Four eyes principle, at least two
­managing directors
Non-petition, limited recourse is
built into the transaction structure
Annual audit by a reputable auditing
company
2.The other TSI certification criteria (see
page 3) are fulfilled.
The “Certified by True Sale International” label
Investor reporting standards
5
Note
General recommendations for reporting
on CLO, RMBS, CMBS, consumer loan
and leasing transactions can be
downloaded from our website
(www.true-sale-international.de).
These represent guidelines for the award
For investors, the reporting objective is to
broken down according to the duration
tions have a high degree of transparency by
of the arrears and the default or the
promptly providing data that are informa-
realisation of collateral
tive, standardised and comparable.
of the TSI certificate. The explanations are
not to be taken as conclusive definitions.
For ABS transactions, the definitions are
those given in the listing prospectus.
Delinquencies, defaults and losses,
ensure that the underlying ABS transac-
One thing common to all asset classes is
that investor reporting makes the following
standardised information regularly access­
ible to the public:
Participating parties, their contact
details and rating development
Notes, their rating, repayments, interest payments, credit enhancements,
realised losses
Portfolio development, broken down
according to size category, type of
­collateral and value (LTV), age of the
receivables, residual maturity, geographical distribution of the borrower/
collateral, repayment variants, financing object, rates of interest, type of
borrower
Waterfall: financial receipts and their
allocation to notes and fees, divided
into repayment and interest
In addition:
detailed presentation of the type
and development of the credit
­enhancement
detailed presentation of the type and
development of the trigger
the development of the set-off risks
the development of current prepayments
TSI‘s reporting standards were develop­
ed in conjunction with experts from the
banking industry and are considered the
benchmark in the relevant asset classes.
The “Certified by True Sale International” label
6
Certification process
TSI‘s standardised certification process
comprises nine main steps. Before the
3.Kick-off meeting of the mandator
and TSI
transaction is closed, a run-up period of
Any outstanding issues are resolved
approximately three months is calculated
A uniform understanding is reached
for the certification process. For frequent
with regard to the underlying transac-
issuers or in the case of less complex
tion structure and its special features
transaction structures, the time frame can
be shorter.
1.Contact
All relevant certification information
and certification documents are sent to
the potential mandator
A personal discussion is arranged to
explain the certification process and to
answer all questions
The application for TSI certification is
submitted
2.Application for TSI certification of an
ABS transaction
The application for certification signed
by the mandator forms the basis for the
start of the certification process
The certification fee is based on the
complexity of the underlying ABS
­transaction
A time frame for the certification
­process is established
4.Review of the relevant transaction
documents
Special features of the transaction
structure (e.g. waterfall, trigger events,
etc) are taken from the prospectus and
the investor reporting criteria derived
from them
A check is made to ensure that the data
relevant to TSI (standard wording for
the description of the certificate) and
the TSI logo “Certified by True Sale
International“ are included in the OC
The “Certified by True Sale International” label
7
5.Agreement on the investor reports
A master report is prepared on the ­basis
of TSI‘s reporting requirements and the
specific features of the transaction
The report is agreed by the mandator
and TSI in several discussions
A check is made to ensure that the
definitions in the OC match those in the
investor report
The agreed draft investor report forms
the basis for regular publication of the
investor report on the TSI website
6.Preparation of the market making
agreement
The market making agreement is
drawn up with at least two market
­makers
7.Award of the certificate by TSI
TSI awards the certificate as part of a
well-considered overall assessment
The letter consenting to the use of the
certificate and the General Conditions of
Certification are sent to the mandator
Certification process
Contact
Application
for TSI
­certification
Kick-off
meeting
Review of
transaction
documents
Agreement
on investor
reports
Time frame: 2–3 months
Marketmaking
agreement
Certificate
awarded
Marketing
Transaction
included on the
TSI website
The “Certified by True Sale International” label
8
8.Marketing the certified transaction
If required, the mandator is given support in press relations and in present­
ing the transaction at TSI events
If requested, an article on the certified
transaction is published on the TSI
website
9.Inclusion of the transaction on the TSI
website
A separate page is set up for the
­certified transaction
The relevant transaction documents
(OC, presale and new issue reports by
the rating agencies) are included
Investor reports (xls and pdf format)
are included throughout the duration of
the transaction
We would be pleased to answer your questions.
Your contact partners
True Sale International GmbH (TSI)
Mainzer Landstrasse 51
60329 Frankfurt am Main
Germany
Tel: +49 (0)69 2992-1710
Dr Hartmut Bechtold
Mario Uhrmacher
Tel: +49 (0)69 2992-1710
Tel: +49 (0)69 2992-1721
hartmut.bechtold@tsi-gmbh.de
mario.uhrmacher@tsi-gmbh.de
Disclaimer: TSI gives no guarantee that the information in this leaflet is up-to-date, complete or accurate.
Fax: +49 (0)69 2992-1717
info@true-sale-international.de
www.true-sale-international.de