The CSSF, Luxembourg's supervisory authority for the
financial sector, has announced that Luxembourg-domiciled UCITS may
no longer invest in loans. This decision has extended a new
administrative practice to the public that the CSSF had been
implementing in recent months with respect to investment in loans
by UCITS.
The CSSF published the new approach on 7 August 2020 through an
update of its FAQ on the Luxembourg law of 17 December 2010 on
undertakings for collective investment (the "CSSF FAQ" on
the "UCI Law"). Now, under new Q&A 1.13 of the
updated CSSF FAQ on the UCI Law, the CSSF states that loans cannot
be treated as assets as referred to in Article 41(1) and (2)(a) of
the UCI Law, as loans qualify neither as money market instruments
nor as transferable securities within the meaning of applicable law
and CESR guidelines (CESR being the predecessor of ESMA).
