What is driving the future of securitisation?

What is driving the future of securitisation?

The securitisation market is entering a period of significant change. From the convergence of private credit and securitisation to evolving regulation, emerging asset classes and the growing use of artificial intelligence, market participants are navigating an increasingly complex landscape. The themes discussed at Global ABS 2026 in Barcelona highlighted both the opportunities and challenges ahead. Here, we examine seven developments we expect to shape the market over the next 12 months and consider what they could mean for issuers, investors and other stakeholders.

1. Private credit and securitisation: deepening convergence

Private credit and securitisation are no longer adjacent markets, they are merging. Private credit funds now routinely use securitisation as a core funding tool, not an occasional capital management exercise. Asset-based finance structures are gaining ground on direct lending. Strategic alliances, partnerships and collaborations between private credit funds, banks, and insurers continue to multiply.

EU and UK securitisation frameworks were built for bank-originated deals, not this hybrid world. Market participants structuring private credit-backed securitisations need to perform jurisdiction-specific regulatory analysis from day one and must track how these regimes evolve over time, and, most importantly, how they interact.

2. Double-pledging risk: heightened scrutiny

Recent market episodes have made double-pledging risk impossible to ignore. Expect originators to face demands for stronger information covenants, regular audit rights, and enhanced asset segregation. Investors and arrangers are actively exploring mechanisms (including technology-enabled solutions) to verify asset exclusivity. If your documentation does not yet address this risk explicitly, we expect this will be picked up and negotiated.

3. Rebuilding investor demand amid regulatory flux

Primary issuance volumes need to recover and investor participation needs to broaden. Both depend on regulatory outcomes that still remain uncertain in the UK and EU:

• UK post-Brexit reforms have been welcomed, but the reform agenda is incomplete. The benefits of new UK proposals, particularly for investment in non-UK securitisations will be undermined if issuers feel compelled to maintain dual compliance with stricter EU requirements;
• in the EU, the review of the securitisation regime has the entered Trilogue stage and the outcomes are less than predictable. Watch the proposed investor sanctions regime closely: penalties for non-compliance with due diligence obligations could materially dampen investment appetite; and
• the EU’s revised prudential framework introduces a new ‘resilience’ concept for bank capital requirements, adding another layer of complexity to capital allocation for securitisation exposures.

4. Cross-border divergence: a permanent feature

EU/UK regulatory divergence is now structural, not transitional. Since the new UK securitisation framework took effect at the end of 2024, dual-compliance structures have become a permanent cost (and concern) centre, particularly for CLO managers and multi-jurisdictional originators running parallel risk retention arrangements.

5. Middle east: a rapidly developing frontier

Saudi Arabia and the UAE are the most compelling near-term growth markets for securitisation. In Saudi Arabia, Vision 2030 is generating a substantial pipeline of securitisable receivables in real estate and infrastructure. A public consultation on securitisation regulation (drawing on best global practices, including parts of the EU framework) is underway. In the UAE, the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) financial free zones enable common law-based structures that allow true sale, bankruptcy remoteness, and security perfection. The DIFC’s security interest registration system provides priority certainty and mitigates double-pledging risk.

Product opportunities span from RMBS (potentially the most transformative near-term product) to buy-now-pay-later receivables, auto loans, floor plan financing, supply chain finance, and back-leverage supporting infrastructure and real estate investment. Synthetic securitisation is generating particular interest.

6. New asset classes: MDB securitisation emerges

The EBRD’s inaugural EUR1 billion synthetic securitisation (Mosaic) marks the emergence of a new asset class in the significant risk transfer market. By transferring credit risk on a diversified reference portfolio to institutional investors while retaining the underlying assets, EBRD has demonstrated how securitisation can mobilise private capital for development finance. If other multilateral development banks (MDBs) follow suit, this could become a scalable new market segment.

7. AI integration: operational transformation and legal risk

AI is moving from pilot projects to production in securitisation operations: loan-level data verification, covenant compliance monitoring, and automated investor reporting are now live use cases.

Three issues will demand significant attention over the next year:

• liability allocation for AI-assisted determinations in servicing and portfolio management;
• data protection compliance in cross-border servicing arrangements; and
• contractual enforceability of outputs generated by automated systems.

A review of servicing agreements, data protection provisions, representations, warranties and undertakings is advisable. Pre-AI boilerplate provisions may no longer allocate risk appropriately. particularly where algorithmic decision-making is deployed.

The securitisation market between now and this time next year will reward participants who anticipate these shifts rather than react to them.

If any of these developments affect your current or planned transactions, we are available to discuss and ready to help.