Abstracts Category : Other

Regulation ofasset-backed securities in Kenya : a comparativeanalysis

by James Mutugi Mutegi

Kenya has had a substantive legal framework forasset-backed securities (ABS) since 2007 but is yet to see itsfirst ABS issuance to date. The Capital Markets Act, Chapter 485A,Laws of Kenya, as well as the Capital Markets (Asset-backedSecurities) Regulations, 2007 have been decried as beinginadequate; but without significant study into the legal andregulatory inequities thereof. ABS are securities that entitleinvestors to a return principally based on the cash-flowsattributable to underlying securitised receivables. Suchreceivables may include mortgages, car and student loans, whichwhen amassed may pose liquidity challenges to their originators.Thus an efficient ABS market would provide diverse wider financingoptions for originators and possibly ease access to credit. Thisdissertation then seeks to investigate the failings of Kenya?sregulatory landscape on ABS, with a focus on the intricacies of thetrue sale of the receivables, choice and structuring ofspecial-purpose vehicles (SPVs), bankruptcy-remoteness of SPVs,taxation obligations and other legal and policy perspectives. Thereview is compared against the lessons gleaned in Africa?s largestsecuritisation market, South Africa, while recognising thedifference in legal systems with Kenya. The United Kingdom is anadditional comparator due to the common law similarities as well asthe development of its capital markets. The dissertation identifieskey conflicts and ambiguities in Kenya?s ABS framework, as well ascritiquing current attempts at remedying them. Summarily, itprovides an unexplored view into the potential workings of ABS as asource of finance in Kenya.Advisors/Committee Members: Botha, Monray Marsellus (advisor).