Assets of Irish-resident special purpose entities grow by €41bn

Total assets of Irish-resident special purpose entities (SPEs) grew by €41 billion to €895.9 billion in the final quarter of last year, the latest figures from the Central Bank show.

The number of SPEs rose by 127 to 2,852. This increase was driven by Irish-resident securitisation SPEs, or financial vehicle corporations (FVCs), whose total assets increased by €49 billion to €479.7 billion.

This was primarily due to an increase in collateralised loan obligation (CLOs) vehicles registered during the quarter, the majority of which migrated from the Netherlands to Ireland.

Other SPEs experienced a fall of €7.8 billion in total assets, bringing the total to €416.2 billion in the fourth quarter, the second consecutive decrease in total assets experienced by other SPEs.

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External financing vehicles saw the largest decrease in assets (€3.7 billion), while investment fund linked vehicles saw the largest increase in assets (€1.7 billion).

The top activity types for both FVCs and other SPEs, CLOs and investment fund linked, both account for 32 per cent of their respective aggregates as at end-2020.

For CLOs, this is the result of continued growth in excess of other securitisation activity, with CLOs only accounting for 9 per cent of total FVC assets in the first quarter of 2016.

Continuing an underlying trend, euro area bank sponsored FVCs held €88.3 billion in total assets in the final quarter of 2020, increasing by €19.7 billion since the same quarter in 2019.

With respect to Other SPEs, the Central Bank said operational leasing assets have not declined as much as might be expected given pandemic-related pressures in the aviation sector.

Total assets fell 7 per cent between the final quarter of 2019 and the final quarter of 2020, and now stand at €34.3 billion.

This decline was spread across most entities in the sector, which is primarily composed of aircraft leasing vehicles. Valuations may fall further still if vehicles have not yet struck a final valuation for their assets at the end of 2020.

Collateralised loan obligation vehicles (CLOs) closed the quarter with total assets of €152.9 billion, an increase of €40 billion. The growth in the number of CLOs continued, increasing by 94 to 414 by quarter-end.

This growth was primarily driven by 79 CLOs, amounting to €31.4 billion in total assets, moving from the Netherlands to Ireland in response to a change in Dutch value added tax on management fees.

In the quarter, CLOs issued €37.5 billion in new securities, of which 84 per cent were issued by UK non-bank financial sector sponsored entities.