Securitisation lawyers have got an axe to grind. This year their annual conference, which in previous years has been held at the deluxe Hotel Arts in Barcelona, was moved to a “crap venue”, as one lawyer puts it. According to reports coming from the disgruntled delegates, many of them stuck in Barcelona because of the Spanish air traffic control strikes, the event failed to live up to its reputation.
Even the all-night party at the Baja Beach Bar, which is usually top on the agenda, failed to compensate for “being stuck in the middle of nowhere”. The securitisation market may be “bigger and better than ever”, but the partner attributable was more concerned with his travel arrangements out of Barcelona than discussing the finer details of the conference.
However, the Italian market can't have gone unnoticed by securitisation professionals. Depending on whether you look at size or number of deals, Italy and the UK are the biggest markets for securitisation in Europe, with Italy pipping the UK to the post in terms of size. In April 1999, the Italian government introduced the Law on Securitisation of Receivables (see page E7 of the European special report, this issue) and as a result, the value of securitisation transactions in Italy rocketed from $4.53bn (£3.03bn) in 1998 to $27.7 (£18.59bn) in 2001.
The market is still open for firms to target. And it is surprising that more aren't following in the footsteps of Ashurst Morris Crisp, Shearman & Sterling and White & Case, which have all recently come on the scene.
Until now, the market has been dominated by the usual suspects – Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer and Chiomenti Studio Legale – but now it is no longer possible to ignore the market potential.
In April, White & Case bulked up its structured finance practice, taking on eight new finance lawyers including tax lawyer Corrado Rosano who joined from Freshfields as a partner. Shearman's Rome office was recently instructed on its first securitisation, advising Citibank on the Orio3 securitisation of residential mortgages, while Ashursts has relocated collateralised debt obligation (CDO) partner SiâWithey from London to Milan.
Allen & Overy and Clifford Chance unsurprisingly both see themselves as the market leaders. But a closer inspection shows that while Clifford Chance focuses on government receivables and treasury transactions, A&O tends to target more of the public deals. Clifford Chance may have the biggest practice, but A&O claims that it has the best. Clifford Chance has also suffered the loss of high-profile securitisation partner Alberto del Din, who left for Bonelli Erede Pappalardo earlier this year.
One problem that firms entering the market may face is pricing pressures, as most parts of the Italian securitisation market export London or US cost bases. So while the market may be an attractive option for large, international firms, it makes less sense for smaller firms or firms bent on keeping up profits.
So far, Ashursts has minimal visibility, but it seems that the firm is intent on leveraging off its recruitment of CDO partner Erica Handling and her team from the London office of Weil Gotshal & Manges. It is worth noting, though, that to date, the Italian market is driven by government receivables and the bank sector, in particular non-performing loans (NPLs). Both areas rely on asset management not arbitrage, which means there isn't much of a CDO practice in the Italian market.
But while Ashursts may not yet be taking the market by storm, its presence is a sign that Anglo-Saxon firms see potential to carve out a niche and therefore we can expect more firms to follow. A move by Linklaters, for example, could potentially give the likes of A&O and Clifford Chance a run for their money. In Germany, Linklaters has one partner and a number of associates working full-time on securitisations and already it has a visible presence in the market. But if it wants to be a core player in the market then it will need to turn its attention to Italy. The question is: will it rise to the challenge?