SCI CRT Awards Issue Oct 19

Investor of the Year
INVESTOR OF THE YEAR
WINNER: EUROPEAN INVESTMENT FUND
The European Investment
Fund (EIF) provides an
unparalleled level of support
to the capital relief trades
market in Europe, bringing
numerous synthetic securitisations
across the line. The EIF is not only a key
driver of innovation, participating in
numerous benchmark transactions across
jurisdiction and asset class, but it has also
helped open up the risk transfer market
to a broader range of participants. The
multilateral development banks is SCI’s
Investor of the Year.
In terms of benchmark deals, one standout
during the awards period was BCC Grupo
Cajamar’s €972.1m significant risk transfer
transaction, IM BCC Capital 1, which will
provide over €1bn for new investment in
SMEs in rural areas and agri-food companies.
This was the first cash SRT issued by a standardised
bank and the first risk-sharing transaction
by a standardised bank that involved both
the EIF and private investors.
The EIF’s securitisation team notes: “It also
featured a number of different players, including
the EIF, EIB and ICO, which was unusual
and it is not always easy to balance the different
interests of all the different parties. It was
a very important deal for a standardised bank
and sets a template that can be imitated by
other banks, particularly because it provided
funding and capital relief.”
Equally notable, the EIF closed the firstever
synthetic trades in Poland – which, in
a non-euro currency, helps to build market
confidence in the use of synthetic securitisation
across Europe. The fund executed
guarantees on senior and mezzanine
tranches for Alior Bank and one of the largest
Polish banks, thereby enabling both to
release regulatory capital and enhance their
capacity to provide SME financing with
improved terms.
As well as trendsetting transactions, the
EIF has helped to broaden the universe of
participants involved in the capital relief
arena. The team explains: “We have done
such a good job that we have now expanded
to the point that we are now needing to bring
in external credit funds to spread the load, so
to speak. As well as this, we are even talking
“
IT ALSO FEATURED A NUMBER OF
DIFFERENT PLAYERS, INCLUDING
THE EIF, EIB AND ICO, WHICH
WAS UNUSUAL AND IT IS NOT
ALWAYS EASY TO BALANCE THE
DIFFERENT INTERESTS OF ALL THE
DIFFERENT PARTIES
”
to insurers that are thinking about entering
the risk transfer market.”
As part of this process, the EIF will front
the whole capital structure and transfer the
first loss position – and sub-investment grade
tranches – to the credit fund, while the originating
bank will hold onto the senior notes.
The EIF will still be very much involved with
the transaction and the entire process will
be very transparent, as per the EIF’s working
principles.
The team comments: “We are piloting
three such transactions utilising a third-party
credit fund, all backed by SME loan collateral
from three different jurisdictions. They should
be announced before the end of the year.”
The team continues: “There are certain
logistical challenges involved in taking on
third parties, and we generally have to do
reshuffles every so often. Incorporating thirdparty
funding is part of the mandate under
Basel 4.”
Internally, the EIF has streamlined the
deal timeline through the development of new
technology, developed by the legal team. As
such, the relevant documentation can now be
put together in a matter of minutes through
the use of templates, rather than writing everything
from scratch.
The EIF’s securitisation team explains:
“Now we can put together 80% of the deal
almost instantly, leaving just the 20% to do
“
WE ARE PILOTING THREE SUCH
TRANSACTIONS UTILISING A THIRD-
PARTY CREDIT FUND, ALL BACKED
BY SME LOAN COLLATERAL FROM
THREE DIFFERENT JURISDICTIONS
”
www.structuredcreditinvestor.com
SCI Capital Relief Trades Awards | October 2019
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