Security Trustee Services

Security Trustee Services

Our Service

We provide independent trustee services on a range of debt transactions. Bluewater offers onshore and offshore asset recovery services for deals with securitised collateral. We provide a straightforward service to different types of borrowers whilst protecting the interests of lenders.

What is a Security Trustee and why is it important?

A security trustee is an independent entity that sits between bond holders (investors) and the issuer (borrower). Many debt investments require a firm to act as the security trustee. The security trustee’s primary responsibility is that of acting impartially but representing the interests of the bond holders, especially if a bond issuer fails to meet an interest payment.

The security trustee takes a charge over the lender’s assets, typically for the benefit of the investors. The debenture deed agreement is signed by the issuing firm and registered with Companies House. In the event a bond issuer fails to meet the payment terms laid out in the investor documentation, the security trustee has an obligation to act. The security trustee files a debenture on the lender’s assets and may then liquidate the company, distributing its remaining assets fairly amongst the creditors.

As the security trustee acts on behalf of all the bond holders, they issue one debenture on the remaining assets. Therefore, only one charge is filed. Consequently, the issuer consumes very little of its remaining assets in legal fees in the event of default and has a greater ability to repay the bondholders.

Case Study

Eterna, Private Clients Europe

Eterna Private Clients Europe specialise in the fields of Finance, Securities, Structured Solutions, Insurance and Real Estate. They raise growth capital for Private Banks, Hedge Funds, Real Estate, Insurance, Telecom and Energy Companies as well as IPOs and M&A advisory.

Eterna has developed a unique MTN ‘pass-through’ debt issuance program which offers asset backed and/or insurance wrapped bonds. The insurance wrap offers a bond performance backstop.

For the asset-backed element of Eterna’s notes, Bluewater has been appointed Security Trustee for the first tranche ($66mln) of a listed $8 billion Medium Term Note issuance programme of the pass-through notes. The programme utilises collateral that has been independently valued at a discount to commercial trade valuation for which Bluewater acts as trustee.

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Here are some of the main reasons for using a security trustee as part of a structure

If the beneficiaries of the security are too numerous for them all to appear on the relevant register (such as the Land Registry in the case of a charge over property).

If the composition of the group of beneficiaries is likely to change over time (such as in the case of loan note holders) – appointing a security trustee in this situation avoids the inconvenience and cost of transferring the underlying security each time a new beneficiary is added or an existing beneficiary transfers its interest.

In order to demonstrate independence from the parties associated with the debtor, originator of the debt obligation, the charger or the subject matter of the security. In other words, if something goes wrong and the security needs to be enforced, the security trustee would act impartially in taking the necessary steps to enforce the security and distribute the proceeds of enforcement to those entitled

Have Questions?

A security trustee is, in its simplest form, the individual or entity that holds the various security interests generated for the trust of secured creditors, such as banks or bondholders, in a financial transaction that may be a securitisation transaction or a direct investment. The protection trustee protects the interests of investors as well as enforces safety upon default.

The most obvious benefit of a security trustee’s presence is that it preserves the interests of the secured creditors. The protection trustee will effectively avoid any uncoordinated acts that could affect the financial transaction’s efficiency. In addition, it will allow capital to be raised by contributions from different creditors without having to give each individual creditor separate protection, minimizing costs and complexity as well as saving time. In the trust, rather than in the individual properties, each creditor has a financial interest.

Bluewater Capital understands the dynamics of structured finance transactions, having, through its affiliated securitisation platform, been involved in a variety of securitisation transactions. Our team has the expertise and technological know-how to carry out this form of niche funding and to provide our customers with step-by-step guidance

Every component of the financial transaction. At the outset, we will build confidence to increase the confidence of potential creditors, over the course of a transaction and the current trustee to be removed or replaced and as part of a restructuring where a new security trustee is needed by new factors in a transaction. If the deal is cross-border or includes collateral with dynamic nuances such as aviation and maritime, Bluewater has the skills to assist