Tied up in red tape

A change in Spain’s credit derivatives law is expected to open the floodgates to a number of synthetic securitisations. But scepticism about the credit default swap market on the part of the country’s financial regulators is likely to make change a slow process, reports Hardeep Dhillon

Spanish banks, like their peers elsewhere in Europe, are looking to use credit default swaps (CDSs) to transfer risk off the balance sheet and offer investors new products. But Spain’s financial regulators have been far from accommodating.

Perhaps the best example of this is in the synthetic securitisation market, where credit derivatives are used to package up risk and sell it on to investors as a securitised transaction. There have so far been two such deals in Spain but both were limited to