Order PRE/627/2011 of 22 March establishing requirements for Asset Securitization Fund Promotion Agreements to Favor Business Financing

OFFICIAL STATE BULLETIN No. 72 Friday, March 25, 2011 Sec. I. Page 31858

I. GENERAL PROVISIONS MINISTRY OF THE PRESIDENCY 5398 Order PRE/627/2011, of March 22, establishing the requirements to which the Agreements for the Promotion of Asset Securitization Funds must adhere to favor Business Financing.

The State, by virtue of the authorizations granted annually since 1999 by the General State Budget Laws, may guarantee fixed-income securities issued by asset securitization funds established under the Agreements signed by the General State Administration and the management companies of asset securitization funds, with the objective of improving the financing of business productive activity. Specifically, part of the fixed-income securities issued by asset securitization funds that aggregate in their assets loans granted by credit institutions to non-financial companies are guaranteed, of which a certain percentage must be small and medium-sized enterprises (SMEs). In this way, credit institutions are incentivized to grant loans to SMEs by facilitating their mobilization through the mechanism of securitization. Likewise, by committing the assigning credit institutions to reinvest the liquidity obtained in the securitization process in new financing of the same type, the effect pursued by the initiative is enhanced, thereby ensuring that the benefits are transferred to the real economy.

The regulation of Asset Securitization Funds is contained in Royal Decree 926/1998, of May 14, which regulates Asset Securitization Funds and the Management Companies of Asset Securitization Funds.

The procedural rules and conditions for the granting of public guarantees have been regulated since 1999 by various ministerial orders, whose adoption adapted to new market conditions within the objective of increasing the efficiency of the guarantees granted.

The current Order PRE/3/2007, of January 10, on the Agreements for the Promotion of Asset Securitization Funds to favor business financing, introduced certain changes such as the modification of the deadline for submitting applications for the formalization of the Agreements –flexibilizing it, according to market conditions–, the possibility of requiring a fee in favor of the State for the granting of the guarantee, and the convenience of limiting said guarantee to the condition that the Funds be of a closed nature.

Law 26/2009, of December 23, on the General State Budgets for the year 2010 introduced substantial changes in the Small and Medium Enterprise Securitization Fund (FTPYME) initiative as a response to the worsening economic prospects derived from the international financial crisis that began in the summer of 2007. First, the constitution of open funds is allowed, with certain limitations. Second, the reinvestment periods are increased. And finally, the percentage of ceded assets originating from loans and credits previously granted to SMEs is reduced.

Subsequently, Royal Decree-Law 6/2010, of April 9, on measures to boost economic recovery and employment, modified the General State Budget Law for the year 2010 with the objective of allowing funds derived from securitization to be used to finance the working capital of small and medium-sized enterprises, which should result in easier access to credit for this purpose. Thus, the traditional restriction on reinvestment in loans or credits with an initial amortization period of not less than one year has been eliminated.

For all these reasons, this Order integrates the modifications introduced by the aforementioned norms, incorporating also some improvements in matters of competence and procedure. First, the head of the Directorate General of Treasury and Financial Policy is assigned the competence to fix, if applicable, the fee for the guarantee, given that they are the competent authority to grant the guarantee by delegation from the head of the Ministry of Economy and Finance.

Second, the deadline for submitting applications is extended by two weeks to facilitate compliance with the new requirement of prior publicity of the fee, if any, that will apply to each call for applications.

Third, the head of the Directorate General of Small and Medium Enterprise Policy is incorporated into the presidency of the Assessment Commission, reinforcing the role of this directorate general in the Assessment Commission.

Finally, the head of the Directorate General of Small and Medium Enterprise Policy is authorized to modify the model agreements.

Article 57.6 of Law 26/2009, of December 23, empowers the head of the Ministry of Economy and Finance to establish the rules that will govern the procedures and the requirements to which the Agreements formalized by the head of the Directorate General of Small and Medium Enterprise Policy, on behalf of the General State Administration, will adhere.

By virtue thereof, upon the proposal of the Second Vice President of the Government and Minister of Economy and Finance and the Minister of Industry, Tourism and Commerce, with the prior approval of the Third Vice President of the Government and Minister of Territorial Policy and Public Administration and in accordance with the Council of State, I decree:

Article 1. Scope of application and approval of agreement models. The purpose of this Order is:

1. To determine the procedure for formalizing the Agreements regulated herein, as well as the requirements that securitization funds must meet, under their auspices, to benefit from the State guarantees provided for in the current Budget Law for each fiscal year to guarantee part of the fixed-income securities they issue.
2. To establish the regime, content, and models of the Agreements listed as Annexes I and II, which may be signed with the Ministry of Industry, Tourism and Commerce, through the Directorate General of Small and Medium Enterprise Policy, by the following entities: a) Management companies of securitization funds registered in the register of the National Securities Market Commission (CNMV) that wish to promote the constitution of securitization funds to favor business financing. b) Credit institutions granting loans or credits eligible for cession to the asset securitization funds indicated in the preceding letter.

Article 2. Submission of applications. The management company of the securitization fund intending to formalize an Agreement in order to obtain the guarantee must request it from the Directorate General of Small and Medium Enterprise Policy between February 1 and March 1 of the fiscal year in which the fund is to be constituted, providing an explanatory memorandum of the project for the constitution of the asset securitization fund. This Memorandum must contain, at least, information on the percentage of loans and credits in the fund's assets corresponding to SMEs, as well as their sectoral and geographical distribution. It must also include information regarding the securities to be issued from the fund and its economic-financial operations. This procedure is carried out independently of those that must subsequently be performed before the National Securities Market Commission in accordance with current regulations.

The application may be submitted in any of the places provided for in Article 38.4 of Law 30/1992, on the Legal Regime of Public Administrations and Common Administrative Procedure, as well as through electronic means in the terms provided for in Law 11/2007, of June 22, on citizens' electronic access to Public Services. The head of the Directorate General of Small and Medium Enterprise Policy is authorized to modify the deadline for submitting applications for the formalization of Agreements when necessary to adapt to market issuance conditions.

Article 3. Evaluation of applications and adjustment of requested guarantees to available budget allocations. Applications for the signing of Agreements and for State guarantees shall be examined by an Assessment Commission responsible for verifying whether all requirements established in this Order are met. The Assessment Commission will evaluate the applications and prepare a report including a proposal for the granting of the guarantee. In this proposal, among other aspects, the amount of any fee to be paid as provided for in Article 5 will be detailed.

For the purpose of determining the guarantee to be granted, if the amount of guarantees requested in the explanatory memoranda exceeds the available budget allocation for the granting of guarantees during the fiscal year, the Assessment Commission will allocate the guarantee as follows: a) 70% of the available budget allocation will be granted to projects presented according to the proportion that the total amount of each asset securitization fund represents relative to the sum of the total amounts of the asset securitization funds expected to be constituted. In no case will the amount of the guarantee assigned to a fund under this criterion exceed 25% of the amount available under this letter. If, as a result of applying this limit, the available budget allocation is not exhausted, the remainder will be distributed as established in the following letter. b) 30% of the available budget allocation and, if applicable, the existing remainder according to the preceding letter, will be granted according to the following criteria:

1. The highest percentage that the outstanding balance of loans or credits to small and medium-sized enterprises represents over the total assets of each asset securitization fund.
2. The lowest percentage that the requested guarantee represents over the total liabilities of each asset securitization fund. When this guarantee allocation system is applied, the proposal for granting the guarantee will be conditioned on the asset securitization fund being constituted with an amount equal to or greater than that stated in the explanatory memorandum.

Article 4. Notification of guarantee granting proposals to interested parties. The proposal for granting the guarantee, prepared by the Assessment Commission, will be notified to the requesting management companies, which will have an irrevocable period of fifteen natural days, counted from the day following its notification, to confirm their application or withdraw from it, in which case it will be archived.

If there is any withdrawal, the Assessment Commission will prepare a new and definitive proposal for granting the guarantee, which it will submit to the head of the Directorate General of Treasury and Financial Policy and notify to the requesting management companies.

Against the resolution approving the definitive proposal for granting the guarantee, which concludes the administrative route, a discretionary appeal for reconsideration may be filed before the same body that issued it, or it may be challenged directly before the administrative jurisdiction, as provided for in Article 116.1 of Law 30/1992, of November 26.

The maximum period for notifying the definitive proposal for granting the requested guarantee shall be four months counted from the date the application was entered into the register of the Directorate General of Small and Medium Enterprise Policy. If this period elapses without an express resolution being notified, the interested party may consider their application rejected by administrative silence, without prejudice to the express resolution that must be adopted without any binding effect on the meaning of the silence, as provided for in Articles 42 and 43 of Law 30/1992, of November 26. Rejection by administrative silence allows the interested party to file the appropriate administrative or administrative-judicial appeal, in accordance with Article 43.3 of Law 30/1992, of November 26.

Article 5. Guarantee fees. The Directorate General of Treasury and Financial Policy may require a fee in favor of the State for the granting of the guarantee, the amount of which will be fixed based on the nominal value of the guaranteed fixed-income securities and their credit rating prior to taking the granting of the guarantee into consideration, and which must be paid by the management company of the asset securitization fund on behalf of or for the account of said fund for the granting of the guarantee, in accordance with Article 117 of Law 47/2003, of November 26, General Budgetary Law. The fee will be settled by the Directorate General of Treasury and Financial Policy once the fund is constituted and must be paid within fifteen days counted from the day following the notification of its settlement to the management entity of the asset securitization fund, with the effectiveness of the guarantee being conditioned on its payment.

The fee, if any, that will apply to each call for applications will be made public, prior to the opening of the deadline for submitting applications, by resolution of the Directorate General of Small and Medium Enterprise Policy upon proposal of the Directorate General of Treasury and Financial Policy. The head of the Directorate General of Treasury and Financial Policy is authorized to fix, if applicable, the amount, as well as the requirements and other necessary conditions for the determination and enforceability of the fee.

Article 6. Granting of the guarantee. The guarantee will be granted by the head of the Directorate General of Treasury and Financial Policy, by delegation from the head of the Ministry of Economy and Finance, once the fund is constituted and registered with the National Securities Market Commission.

Article 7. Composition of the Assessment Commission. The Assessment Commission mentioned in Article 3 shall be presided over by the head of the Directorate General of Small and Medium Enterprise Policy and shall be composed of two representatives from said Directorate General, two from the Directorate General of Treasury and Financial Policy, one of whom shall act as Secretary, and one from the Directorate General of Economic Policy, to be designated by their respective heads of Directorate General.

Representatives of the credit institutions adhering to the collaboration agreements signed with the Ministry of Industry, Tourism and Commerce, as well as any other entities or institutions related to securitization processes, may be summoned to attend meetings of the Assessment Commission to be heard on general technical aspects. The Assessment Commission shall be attached to the Directorate General of Small and Medium Enterprise Policy and shall be subject to the regime provided for collegiate bodies in Title II of Law 30/1992, of November 26.

Article 8. Financial conditions of the funds and obligation to provide information.

1. Without prejudice to what may be established, if applicable, by the corresponding General State Budget Laws or other laws with the rank of law, asset securitization funds must meet, in addition to the general prescriptions established in their specific regulations, the following requirements: a) Regarding assets, loans or credits ceded by credit institutions that have adhered to the standard Agreement signed with the Ministry of Industry, Tourism and Commerce may be securitized. Such loans or credits must meet the conditions stipulated in the aforementioned agreement, the text of which is incorporated as Annex II in this Order. b) Regarding liabilities, up to 80% of the nominal value of the bonds of each series or class of fixed-income securities issued by the asset securitization funds may be guaranteed, provided they have a credit rating of at least AA, Aa, or equivalent, determined without taking the granting of the guarantee into consideration. c) There must be credit enhancement that reduces the risk of the guaranteed securities, so that they receive a minimum credit rating of those indicated in the preceding letter, granted by a rating agency recognized by the National Securities Market Commission. This rating must be obtained prior to the definitive granting of the guarantee. d) All securities issued by asset securitization funds belonging to the series or classes guaranteed by the State must, in any case, be fixed-income and traded, even if the guarantee only affects a proportion of the series or class, on an official Spanish secondary securities market.
2. Management companies of asset securitization funds must send to the Directorate General of Treasury and Financial Policy, in the form and with the requirements determined by the same, the necessary information for the control of the risk assumed by the State by virtue of the guarantees.

Single Additional Provision. Powers regarding agreements. All powers necessary for the celebration, execution, or termination of the agreements are delegated to the head of the Directorate General of Small and Medium Enterprise Policy, and they are authorized to modify the model agreements included in Annexes I and II of this Order.

Single Repealing Provision. Repeal of regulations. Order PRE/3/2007, of January 10, on the Agreements for the Promotion of Asset Securitization Funds to favor Business Financing, is hereby repealed.

Single Final Provision. Entry into force. This Order shall enter into force on the day following its full publication in the "Boletín Oficial del Estado".

Madrid, March 22, 2011.–The Minister of the Presidency, Ramón Jaúregui Atondo.

ANNEX I Standard Collaboration Agreement between the Ministry of Industry, Tourism and Commerce and the Management Companies of Asset Securitization Funds to Constitute Asset Securitization Funds to Favor Business Financing

In accordance with the provisions of Article... of Law .../......., of... December, on the General State Budgets for ........., and Order PRE/…../…...., of... .............., on the Agreements for the Promotion of Asset Securitization Funds to favor Business Financing, which delegates to the head of the Directorate General of Small and Medium Enterprise Policy the power to celebrate, on behalf of the General State Administration, collaboration agreements aimed at constituting asset securitization funds to favor business financing.

With the mandatory report of the Assessment Commission referred to in Article 3 of the aforementioned ministerial order.

In view of the above, on the one hand, Mr............., head of the Directorate General of Small and Medium Enterprise Policy, on behalf of the General State Administration, and on the other, Mr............, representing the asset securitization fund management company............., mutually recognizing the necessary capacity to contract, agree to the following stipulations:

CLAUSES First.–By this Agreement, the head of the Directorate General of Small and Medium Enterprise Policy commits to submit to the Directorate General of Treasury and Financial Policy the proposal for granting the guarantee included in the report of the Assessment Commission and accepted by the management company as reflected in the document annexed to this agreement, for the fixed-income securities issued by the asset securitization fund............. FTPMY managed by the society...................., in accordance with current legislation and, in particular, in accordance with this Agreement.

Second.–The management company commits to comply with the requirements established in Law .../..... of... December, on the General State Budgets for... and Order PRE/…../…........., of... ..........., on the Agreements for the Promotion of Asset Securitization Funds to favor Business Financing, regarding the nature of the assets and liabilities of the fund constituted as a result of this Agreement.

Third.–The General State Administration undertakes to cede to the management company the non-exclusive use of the FTPMY commercial brand or its acronym FTP and its logos and identifying signs.

Fourth.–Once this agreement is signed, its effectiveness will be conditioned, among other things, to the registration of the fund in the register of the National Securities Market Commission, to the granting of the guarantee for the fixed-income securities specified in the act of granting the guarantee, which, if any, the head of the Directorate General of Treasury and Financial Policy agrees to, as well as to the payment of the fee in favor of the State that has been established.

Fifth.–This Agreement shall be governed, in addition to what is established in the preceding clauses, by Law .../........., of... December, on the General State Budgets for..., Order PRE/…../…...., of ... ..............., on the Agreements for the Promotion of Asset Securitization Funds to favor Business Financing, by the provisions in the regulations on asset securitization funds, general administrative law norms, and any others applicable to it.

ANNEX II Standard Collaboration Agreement between the Ministry of Industry, Tourism and Commerce and the Credit Institution to Determine Loans or Credits Eligible for Cession to the Asset Securitization Fund Created to Favor Business Financing

On the one hand, Mr.............., head of the Directorate General of Small and Medium Enterprise Policy, on behalf of the General State Administration, and on the other, Mr............, representing the credit institution............, mutually recognizing the necessary capacity to contract, agree to the following

STIPULATIONS First.–The credit institution signing this Agreement commits to comply with the requirements regarding loans and credits eligible for cession to the asset securitization fund established in Stipulation Second of this Agreement celebrated under the auspices of Order PRE/…/…, of…......., on the