skip to Main Content

COVID-19 Fallout Sees Euro Area FVC Sector Shrink for the First Time in a Year

COVID-19 Fallout Sees Euro Area FVC Sector Shrink For The First Time In A Year

Following three quarters of consecutive growth, Q1-2020 saw the euro area financial vehicle corporation (FVC) sector shrink by a net 13 vehicles (-0.3%).

After markets experienced a rocky start in the initial half of 2020, many have been curious as to how the spread of COVID-19 would ultimately affect the securitisation industry. While some jurisdictions did see some growth, ultimately the euro area experienced a decline in the first three months of the year.

Countries Affected by FVC Declines

While most of the euro area remained stagnant with little movement between Q4-2019 and Q1-2020, there was a significant drop recorded in two countries: Italy and Luxembourg.

Italy saw a total decline of 12 FVCs, compared to the prior growth of 29 FVCs in Q4-2019. Luxembourg on the other hand saw a total decline of 8 FVCs despite a growth of 14 FVCs in Q4-2019.

Despite these declines, both Italy and Luxembourg have proved to be two of the most active jurisdictions with substantial growth over the past year.

Countries Experiencing FVC Growth in Q1-2020

However, it is not all bad news in terms of the Q1 picture. While not as significant as previous quarters over the past year, Ireland saw a net increase of 3 FVCs in Q1-2020 and is in fact the only country that has seen consistent growth in the last four quarters, with a total increase of 56 FVCs since Q2-2019.

Other countries worth mentioning who had growth in Q1-2020 are Spain and Portugal. Both domiciles saw growth of +3 and +1 respectively, despite FVC numbers declining in both areas in Q4-2019.

Total FVCs Launched and Deregistered

The total number of FVCs that were launched in Q1-2020 was 60, while 73 existing FVCs have been deregistered. The deregistration of an FVC signals that this vehicle has wound down and is preparing to go into liquidation.

When we look at the Q1-2020 figures, we can see there has been some fluctuation among regions in terms of FVC numbers. However, the direction of the broad euro area total provides us with an overall view of how FVCs have been affected in the first part of this year. This signals that ongoing world events including the COVID-19 pandemic have impacted the sector, and that we may see additional effects stemming from this in coming quarters.

Looking for More Research?

Atlantic Star Consulting has now launched the complete Q1-2020 Euro Area FVC Administrator Report that provides a comprehensive look at the euro area FVC sector and key developments in the first quarter of the year. This report is available only to clients of Atlantic Star Consulting and can be accessed through our online store at: https://www.astarconsulting.net/product/euro-area-fvc-administrator-report-q1-2020/FVCs are securitisation vehicles domiciled in the euro area which meet the definition of ECB/2013/40.