A US$131.6mn landmark securitisation, which saw BNP Paribas become the first bank to sell a bundle of commodity trade finance (CTF) loans to investors, is to be repaid early due to the conflict in Ukraine, according to a published Fitch Ratings note.
Responding to the note, a bank source confirmed the news but informs GTR: “We’re very limited in terms of what comments we can give, or even guidance.”
The bundle, launched in August last year, was understood to contain portions of loans made by BNP Paribas to commodities traders for oil, ferrous or non-ferrous metals, coal and fertilisers.
The US$131.6mn Lighthouse Trade Finance Issuer I notes will be redeemed early because of “the shortage of commodity transactions” originated by BNP Paribas’s Geneva office, which focuses on energy commodities sourced from Eastern Europe, including Russia, Fitch’s statement read.
With recent restrictions on trade with Russia amid the escalating violence in Eastern Europe, Fitch added in the statement: “The recent geo-political development in the area had a significant weight on the decision.”
BNP had started planning the transaction in 2009 as a response to the financial crisis, and the bank’s Lighthouse platform was developed to allow the bank to repackage transactions as a distributable asset.
Fitch states that the bonds will be redeemed on August 18 and investors will receive their principal as well as a prepayment break fee.