Malta could lead on ABS to finance shipping and aviation

Malta has the attributes to be Europe’s leading provider of asset-backed securities to finance shipping and aviation, according to Managing Partners Group (MPG), the international asset management group.

Malta has the largest shipping registry in Europe, is a leading centre for aircraft maintenance and the tax rules associated with its securitisation law match the needs of the two industries, says Jeremy Leach, Chief Executive officer for MPG.

He commented: “Malta has always had strong aviation and shipping industries because it is an island. It has the third largest shipping registry in the world and the largest in European there is no better judiciary to understand maritime law.

“Luxembourg is a leading provider of securitisations in Europe and in many areas it is hard for other financial centres to compete with it. But for shipping and aviation Malta is leagues ahead.”

Jeremy addressed delegates on the taxation issue at the Finance Malta 10th Annual Conference earlier this month in a panel session entitled Opportunities for Malta in the Changing Regulatory Landscape. He said: “No VAT is applied to transactions, no withholding tax is payable on dividends or interest and most importantly, there is no taxation on profit made inside securitisations in Malta. This means that tax free profits can be accrued inside an ABS to offset the depreciation of the underlying assets, which  significantly reduces the default risk.”

Joe Portelli, Chairman of the Malta Stock Exchange, also announced to the panel that the Exchange is planning to enter the securitisations market. He commented: “We are pleased and excited to be entering the regulated wholesale market. We believe the Institutional Securities Market (ISM) making up a segment of the Malta Stock Exchange will showcase Malta’s growing competence and cost effectiveness in structuring all types of securitised products.”

MPG opened an office in Malta in 2015 to launch a securitisation platform for the issuance of asset-backed securities by its asset management and third party buy-side clients. A key factor in this decision was Malta’s Securitisation Law, which is the most up to date and pre-empts a lot of the issues encountered by the aging laws in competing jurisdictions and has established the country as a leading European Union jurisdiction for the issue of of Asset Backed Securities.