France opens borders to credit derivatives

The use of credit derivatives by French mutual funds has taken a major step forward after a change in securitisation law last year. Hardeep Dhillon reports

French mutual funds are taking advantage of last year’s change in the country’s securitisation law, which now allows them to use credit derivatives, to increase their flexibility in an environment of tight bond spreads.

France was the first European country whose finance industry is based on civil law to enact a securitisation law in 1988. This paved the way for the creation of the mutual debt fund, or fonds commun de créances (FCC), which allowed the acquisition of receivables and issuance of