Capital Relief Trades
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Regulatory boost
Positive prospects for project finance CRTs
Santander has completed Fitzroy 2018-1 CLO, a financial guarantee and significant risk transfer transaction that references a £1.12bn portfolio of UK project finance loans. Regulatory clarity over acceptable structures could pave the way for further project finance CRT issuance in the future.
Fitzroy is Santander’s second project finance transaction in two years, following Renew Project Finance CLO 2017-1 .......
News Analysis 3 October 2018
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Risk transfer round-up - 28 September
CRT sector developments and deal news
Santander is believed to be the third capital relief trade issuer readying a commercial real estate transaction in 4Q18, along with Lloyds and RBS.
The lender’s last CRE risk transfer deal was issued in December 2017. Dubbed Red 1 Finance CLO 2017-1, the £87.1m financial guarantee referenced a £916.8m UK CRE portfolio.
The transaction printed alongside two other debut ......
News 28 September 2018Premium Content
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Risk transfer return
Standard Chartered completes trade finance CRT
Standard Chartered has printed its first capital relief trade in three years, dubbed Trade Finance Transaction 2018-1. The bank’s last public trade was a US$135m corporate CLN called Baruntse, which was completed in 2015 (see SCI’s capital relief trades database). It also rolled the Shangren III (Trade Finance) into a new deal in June.
Rated by Moody’s, .......
News 27 September 2018
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CRT line-up finalised
SCI seminar to assess regulatory threats and opportunities
The line-up for SCI’s 4th Annual Capital Relief Trades Seminar – taking place on 16 October at One Bishops Square, London – has been finalised. With Basel 4 impacting all approaches to the calculation of risk-weighted assets, credit institutions are being forced to optimise their portfolios once again. A major theme of the event is therefore how market participants .......
News 25 September 2018
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Inaugural infrastructure CRT launched
Synthetic securitisation marks global first
The African Development Bank (AfDB), alongside Mariner Investment Group, the European Commission, Mizuho and Africa50, has issued a debut US$1bn capital relief trade (CRT) backed by a pan-African portfolio of loans to infrastructure projects and financial institutions. The transaction, dubbed Room2Run, is not just a first for the AfDB, but also marks the first ever transaction of its kind between a multi-lateral .......
News Analysis 20 September 2018
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Risk transfer round-up - 14 September
CRT sector developments and deals news
Santander is rumoured to be readying a corporate CRT for 4Q18. The Spanish bank’s last corporate deal, dubbed Grafton CLO 2016, was inked in December 2016.
The CLN was priced at 10.2% and referenced a £1.25bn portfolio of primarily UK corporate loans (see SCI’s capital relief trades database).
...... News 14 September 2018Premium Content
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Brexit uncertainty highlighted
CRTs unaffected although contract continuity concerns underscored
Brexit has so far had a neutral impact on capital relief trades (CRTs) in terms of structuring and issuance. However, uncertainty remains over how EU law and the CRR will be incorporated into UK law, which is an important issue pertaining to the continuity of CRT contracts.
Steve Gandy, md and structurer at Santander Corporate and Investment Banking, comments: "So far .......
News Analysis 12 September 2018
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Risk transfer round-up - 7 September
CRT sector developments and deal news
Caixabank is rumoured to be prepping an SME significant risk transfer transaction for 4Q18. This would follow a bilateral SME trade that the issuer is believed to have completed in July.
The Spanish bank’s last confirmed transaction was Gaudi Synthetic 2015-1. The deal - inked in February 2016 - was a €121.5m CLN referencing a €2bn Spanish SME ......
News 7 September 2018Premium Content
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SME SRT completed
Intesa taps Italian government guarantee fund
Intesa Sanpaolo has completed a guarantee agreement with Fondo Centrale di Garanzia, the Italian government guarantee fund, to spur economic growth via lending to Italian SMEs. This is the fund’s first synthetic securitisation that includes mid-cap firms (with up to 499 employees), which were previously excluded from its portfolio policies.
Under the agreement, Intesa Sanpaolo will ramp up .......
News 3 September 2018
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Risk transfer round-up - 31 August
CRT sector developments and deal news
Lloyds is rumoured to be readying another commercial real estate risk transfer trade from its Wetherby programme for 4Q18. This would be the issuer’s second post-crisis synthetic CRE deal, following the issuance of Wetherby Securities 2017 last year.
Wetherby Securities 2017 was a £47.1m financial guarantee referencing a £672.9m portfolio of UK CRE. It printed alongside two other ......
News 31 August 2018Premium Content
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Moral hazard addressed
EIF completes SRT with BP Bari
The EIF has completed a guarantee agreement with Banca Popolare di Bari under the SME Initiative for Italy. The transaction consists of a number of structural features designed to reduce moral hazard.
According to Sebastian Dietzsch, associate director at Scope: “The loss claims under the guarantee are based on an expected loss calculation, which minimises cashflows between BP .......
News 17 August 2018
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Risk transfer round-up - 17 August
CRT sector developments and deal news
UBI Banca is believed to be marketing its second-ever capital relief trade. The Italian bank’s inaugural risk transfer transaction, dubbed UBI 2017 RegCap1 and inked last year, was a €100m deal referencing a €1.9bn Italian corporate portfolio (see SCI’s capital relief trades database).
...... News 17 August 2018Premium Content
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SMEs supported
Supranationals driving new credit ecosystem
A new ecosystem is gaining traction in the securitisation market, with supranational institutions stimulating organic origination by non-bank lenders. By facilitating the flow of credit and acting as a bridge to the capital markets, the prevalence of their activity – especially in the SME sector – is creating a new sub-category of transactions.
Supranational institutions are a key .......
News Analysis 16 August 2018
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Risk transfer round-up - 10 August
CRT sector developments and deal news
Banco Comercial Portugues is believed to be prepping a significant risk transfer deal for 4Q18. According to SCI’s capital relief trades database, the Portuguese lender’s last deals were Caravela SME No. 4 and Caravela SME No. 3 in May 2014 and June 2013 respectively.
Barclays is also rumoured to be working on another Colonnade deal for 4Q18, referencing UK ......
News 10 August 2018Premium Content
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Second Magdalena deal priced
Santander SME portfolio attracts further investor interest
Santander has completed its second FT Pymes Magdalena risk transfer transaction. The €166.3m CLN references a €2.5bn Spanish SME portfolio and pays three-month Euribor plus 8.85%.
The portfolio comprises a diversified and granular portfolio of Spanish SMEs -including self-employed borrowers - a market where Santander holds a dominant position. Protection has been bought on 95% of the reference portfolio.
The .......
News 8 August 2018
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Retention questioned
Call for NPL regulatory differentiation
Questions are emerging over the relevance of risk retention in the context of European non-performing loan securitisations. Given its utility in transferring risk on capital-intensive portfolios, securitisation could play a greater role in resolving Europe’s troubled loan burden if there was regulatory differentiation for such assets.
Vertical risk retention may make sense in terms of originating banks being .......
News Analysis 7 August 2018
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CRT resilience highlighted
Investors undeterred by turn in credit cycle
Widening credit spreads and an expected turn in the credit cycle have not induced significant changes in the structuring of capital relief trades, thanks to the positive performance of the asset class. Indeed, investors continue to allocate more capital to the sector.
“QE ends soon and tightening will start next year. However, Euribor is quite low. It will take a .......
News Analysis 6 August 2018
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Risk transfer round-up - 27 July
CRT sector developments and deal news.
Mitsubishi UFJ is rumoured to be prepping its first transaction referencing European loans. The bilateral deal is expected to close in 4Q18.
The Japanese issuer’s last and inaugural capital relief trade, dubbed Battersea and placed in January 2017, is believed to be a US$100m five-year bilateral deal referencing a US$1bn Asian oil and gas portfolio.
....... News 26 July 2018
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Return to form?
More traditional synthetic CRE deals emerging
A number of issuers are working on CRE capital relief trades, including some UK banks that issued CRE deals in 4Q17 (see SCI’s CRT database), with a view to closing before year-end. However, some of these transactions suggest that the asset class may potentially be returning to more traditional significant risk transfer structures and investors.
David Wainer, partner at .......
News Analysis 13 July 2018
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Risk transfer round-up - 6 July
The Cayman Islands stock exchange has released a late June document regarding an early redemption of Deutsche Bank’s GATE 2015-1 capital relief trade (see SCI’s capital relief trades database). A call notice has been issued and the trade will be called on its next payment date in mid-July.
Deutsche Bank replaced this trade with a new trade, dubbed .......
News 6 July 2018
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Barclays engineers comeback
Further impetus added to Colonnade programme
Barclays has returned to the risk transfer market with Colonnade Global 2018-1, a £34.2m cash-collateralised eight-year financial guarantee. As with previous Colonnade transactions, the credit protection covers both principal and accrued interest (SCI 8 September 2017).
Rated by DBRS, the deal comprises US$325.3 triple-A rated class A notes, US$6.2m double-A rated class B notes, US$1.75m double-A rated class C .......
News 2 July 2018