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Irish SPV Sector Sees First Decline in 4 Years Alongside COVID-19 Crisis

Data reviewed in the Q1-2020 Irish SPV Report shows that the COVID-19 crisis may have contributed to the first decline in Irish SPV numbers since 2016.

There is no question that the financial sector has been carefully watching the COVID-19 pandemic sweep across the world, and that the pandemic will have a significant and lasting effect on the economy.

While it is difficult at this stage to know the full impact that COVID-19 will have on the Irish SPV sector, data reviewed by Atlantic Star Consulting in the Q1-2020 Irish SPV Report shows that we are now seeing the first impacts of the crisis, which may continue throughout the rest of the year.

Total SPV Numbers Down in Q1-2020

In the latest report we see how despite a near-consistent rise over the last 4 years, Q1-2020 saw a drop in total active Irish SPVs of -18, ending the quarter at 2,613 vehicles. This represents the first decline since 2016.

The drop in vehicle numbers came from a -21 move in non-securitisation SPVs (Other SPEs), while FVCs (securitisation SPVs) saw an overall rise of +3. FVCs have sustained a long trend of rising vehicle numbers over the past few years, with FVCs rising in each of the last 14 quarters.

In fact, Ireland was one of the few countries to see a rise in FVCs during Q1-2020. Only Spain and Portugal also saw growth, with +1 and +3 FVCs respectively, while all other countries saw no change or declines. See our article here for more details.

Assets Held by Irish SPVs See Drop in Q1-2020

The report also finds that the total assets held by Irish SPVs at the end of Q1-2020 was €869bn, consisting of €463bn held by FVCs, and €406bn by Other SPEs.

This equates to a total drop of €7.1bn during the quarter. Looking behind these figures shows that FVCs fell by €9.7bn while Other SPEs saw a rise of €2.6bn.

COVID-19 Survey Shows Potential Impact for 2020

Our recent survey assessed the views of Irish SPV industry professionals on how their outlook for the sector had changed due to the COVID-19 pandemic.

This survey took place in May 2020, and our analysis of the feedback suggests that participants expect the total amount of Irish SPVs to fall to 2,477 vehicles by Q1-2021, a reduction of 5.5% from today’s figures.

Despite this, there are several green shoots. Areas of growth that participants identified include CLOs and several class of ABS structures, in particular vehicles sponsored by US-based firms.

Read the Full Report

For more analysis, read the full Q1-2020 Irish SPV Report here.

FVCs are securitisation vehicles domiciled in the euro area which meet the definition of ECB/2013/40. Other SPEs are entities availing of S.110 TCA 1997 tax status, which do not fall under the FVC definition.