Related News

ECAs throw support behind steel giant’s decarbonisation push

Swift says CBDC testing for trade payments showing positive results

Trade Leaders Interview: Marie-Laure Gastellu, Société Générale

Bank results show muted trade finance market

GTR Leaders in Trade: The shortlist

Frankfurt-headquartered Deutsche Bank has issued the fifth iteration of its Trafin securitisation programme, which provides credit protection for an underlying portfolio of trade finance assets worth US$3.5bn. 

The bank announced this week it had originated, structured and placed a first loss tranche of US$227.5mn with a syndicate of institutional investors from Europe and the Americas. 

It says the programme, called Trafin 2023-1, gives investors the opportunity to invest in securitised tranches based on short-term trade finance products – including letters of credit and accounts receivables – and provides the bank with additional funding. 

Historically, such programmes have also helped reduce the amount of capital banks are required to hold by de-risking their overall portfolio, as investors effectively take on the risk of absorbing initial losses from higher-risk loans. 

“The continuation of this landmark securitisation programme – now in its fifth iteration – allows our trade finance business to originate a greater volume of transactions in the space, which, in turn, is helping us to power the real economy and develop local communities,” says Oliver Resovac, global co-head of trade finance and lending at Deutsche Bank. 

Resovac adds the lender remains one of only “a small number of issuers in the synthetic securitisation space”. 

Trafin 2023-1 has a 3.5-year maturity, but since the underlying trade finance assets are short-term, the portfolio will be replenished each month with new assets, the bank says. The average life of the initial pool is 90 days. 

The programme’s issuance follows the maturity of Trafin 2018-1, its previous iteration, in November last year. The third iteration, Trafin 2015-1, was at the time the largest-ever securitisation of trade finance assets. 

Deutsche Bank says the transaction also highlights the growing appeal to investors of trade finance as an asset class, as it offers short-term products diversified across various industries, geographies and client types. 

Its self-liquidating nature and typically low default rates make trade finance “a stable, attractive and relatively scarce asset class for capital market investors”, the bank says. 

In response to high demand from investors, Resovac says Deutsche Bank is now expanding into other forms of capital investment products based on trade finance assets. 

These include “funded risk-sharing arrangements, traditional working capital, and documentary trade facilities, among others”, he says. “Going forward, we believe these products will play an increasingly important role in providing additional sources of capital.” 

The lender adds that Trafin 2023-1 has been verified as compliant with EU standards.