The EIB Group (European Investment Bank, EIB, and European Investment Fund, EIF) has signed its fourth synthetic securitization transaction with BNP Paribas (EPA: BNP) since 2017.
Similar to the three previous transactions, its investment will “support small and medium-sized companies while contributing to the transition to climate neutrality.”
The EIF is providing protection on “a mezzanine tranche of €106 million (which is in turn counter-guaranteed by the EIB) in the form of an unfunded guarantee.”
The structure, which “features synthetic excess spread, a two-year revolving period and pro-rata amortization of the senior tranche and the mezzanine tranche (subject to performance triggers), comprises a portfolio of small business, micro and corporate loans originated by BNP Paribas with a total outstanding balance of about €1.4 billion. As part of the transaction, BNP Paribas is transferring credit risk on a mezzanine tranche through the EIF guarantee.”
The securitized loans portfolio “remains on the bank’s balance sheet.”
The securitization transaction has “been structured to achieve optimal risk-weighted asset relief over the next five years and, consequently, free up lending capacity to further support real economy financing.”
Under the arrangement, BNP Paribas pledges “to supply new lending of €425 million to French small businesses and mid-caps over a two-year period. At least 20% of this financing will be allocated to projects aligned with climate action and environmental sustainability, highlighting the commitment of BNP Paribas and the EIB Group to supporting the transition to a low-carbon economy.”
Marguerite Bérard, Head of French Retail Banking of BNP Paribas and member of the Executive Committee, remarked:
“We are thrilled to now be able to commit, for the fourth time with the EIB Group, to making €425 million in new financing available to small businesses and mid-caps at reduced rates over the next two years. This new financing will further contribute to our customers’ efforts to accelerate their energy transition. This financing comes in addition to our many support schemes for corporate clients designed to accommodate the local economic reality, as closely as possible.”
EIB Vice-President Ambroise Fayolle explained:
“With their fourth joint securitisation transaction since 2017, the EIB and BNP Paribas are continuing their efforts to facilitate access to finance for small businesses and mid-caps. Financing these entities is an EIB and EU priority — one to be achieved by working with our banking partners to develop attractive credit solutions that help sustain business operations and support investment.”
EIF Chief Executive Marjut Falkstedt added:
“The EIF is pleased to be working with BNP Paribas to use our securitisation tools to provide additional resources to small businesses and mid-caps. BNP Paribas is a long-standing and trusted partner for the EIF, enabling it to provide effective support to French companies in their search for financing for their investments.”
