Deutsche Bank has closed a US$3.5bn synthetic collateralised loan obligation (CLO) – a transaction that it said represents the largest-ever securitisation of trade finance assets in the market.
Launched under the bank’s TRAFIN programme – and dubbed TRAFIN 2015-1 – it marks the third synthetic CLO launched by the German bank and enables it to hedge a globally diverse short-term trade finance portfolio of corporate and financial institutions via the sale of a first loss tranche.
Deutsche Bank’s global transaction banking division structured, arranged and placed the first loss notes, building a syndicate of seven key investors from Europe and the Americas.
The bank added that the underlying portfolio’s short-term nature means that the portfolio will be regularly replenished, while the transaction’s structure enables a broad range of assets to be included, providing maximum flexibility in further developing de-risking activities.
“The TRAFIN programme is playing an important role in our ongoing risk and balance sheet management efforts at a competitive cost,” said Michael Spiegel, head of trade finance and cash management corporates of global transaction banking at Deutsche Bank. “Furthermore, as the programme evolves, we expect it to further industrialise our distribution and hedging of trade finance risk.”
Colleague Guy Brooks added that the transaction reflects a growing appetite for trade finance assets among institutional investors. “With this model, we can tap investors that would usually not consider trade finance as asset class,” he said.
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The European Commission fined Credit Agricole, HSBC and JPMorgan Chase a total of €485m for manipulating the price of the financial benchmark.