June 3, 2020 / 9:48 AM / a month ago

Israel launches public securitisation market to diversify funding

JERUSALEM, June 3 (Reuters) - Israel’s markets regulator on Wednesday gave the go-ahead to allow public securitisation deals in a move aimed at increasing the sources of funding and capital in the economy and boosting competition in the financial system.

The process to develop a securitisation market in Israel has taken nearly five years and will make it possible to securitise a variety of loans by creating tradable financial instruments backed by packages of assets, such as mortgages, and sold to investors.

The regulator said in a report that diversifying credit sources was crucial, especially for small firms unable to issue bonds on the capital market and facing challenges in obtaining financing, given the high costs of loans from non-bank lenders.

Anat Guetta, chairwoman of the regulator Israel Securities Authority (ISA) said opening a public securitisation market should help economic growth.

“Securitisation deals are a new, fast and attractive route that will ... open up sources of funding to small and medium sized businesses and enable them to expand their operations and drive the wheels of the economy,” she said.

Guetta said ISA was building a regulatory infrastructure for financial instruments that would create new financing options.

Initially, securitisation transactions would partly be based on U.S. and European regulations, the ISA said, adding that public securitisation had advantages over private securitisation, such as in transparency and in disclosure.

Reporting by Steven Scheer; Editing by Edmund Blair

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