IIG Trade Finance has announced the securitisation of a bundle of non-bank trade finance loans.
The Latin American trade finance loans have been bundled as US$220mn package of collateralised loan obligations (CLOs), to be invested in on a five-year basis.
The loans are mainly in the soft commodity and agribusiness space, originated by IIG Trade Finance for its own SME clients. Deutsche Bank was enlisted to structure, arrange and place the CLO, which is divided into three tranches (or notes) worth US$110mn, US$77mn and US$33mn, respectively.
IIG’s co-managing partner Martin Silver tells GTR that the deals included in the CLO are short-term – up to a year in tenor – and have an average value of US$7.5mn.
The CLO is populated by a revolving loans portfolio in the processing and export of physical commodities space, such as cotton, frozen beef and seafood, powdered milk and soybean meal.
Silver says IIG hopes to place similar facilities on an ongoing basis and that “we don’t tend to do another one immediately, but we’d hope to be doing another one within the next year”.
Over the past year, securitisation has been a real feature of the trade finance market, with banks from BNP Paribas, Commerzbank and Citi and Santander (combined) developing ways in which to continue servicing their clients, but also free-up their balance sheets ahead of the Basel III Accord and other market pressures.
IIG implies that whereas many of the banks’ offerings have come in the face of necessity on their own part, in this case it has been launched in response to market demand, with SME exporters in Latin America hungry for trade finance loans.
In this case, the securities are not bank loans – another novel structure for the market. IIG is keen to work with Deutsche Bank again, says Silver, which was looking for a way to involve itself in the securitisation trend without launching its own solution, platform, or bond.