This article is published in association with European Investment Bank.
- The EIB Group, through the European Investment Bank and the European Investment Fund, has participated in two BBVA securitisation transactions, investing a total of €714 million.
- The investment will enable BBVA to allocate approximately €1.3 billion to promoting sustainable housing construction and financing the liquidity and investment needs of small and medium-sized enterprises and entrepreneurs in Spain.
- €230 million will go towards financing the construction of near-zero emission residential buildings by small and medium businesses and mid-caps that promote sustainable housing.
- The operation will boost Spanish companies’ competitiveness and contribute to the EIB Group’s priorities of sustainable housing construction and stronger EU capital markets.
The European Investment Bank Group (EIB Group), comprising the European Investment Bank (EIB) and the European Investment Fund (EIF), has participated in two BBVA securitisation transactions, investing a total of €714 million. The investment will enable BBVA to mobilise approximately €1.3 billion to finance the liquidity and investment needs of small and medium-sized enterprises (SMEs), mid-caps and entrepreneurs in Spain, and the construction and renovation of sustainable housing. The EIB Group investment will be channelled through two securitisation transactions.
The first involves the securitisation of a consumer loan portfolio, designed to facilitate approximately €1.1 billion in financing to help companies cover their liquidity needs and make investments. This financing is expected to have an impact mainly on companies operating in cohesion regions, where per capita income is below the EU average. Entrepreneurs will also receive financing, especially those who are starting new projects or who are in the early stages of growing their businesses.
The second transaction involves a synthetic securitisation of a mortgage loan portfolio. It will enable BBVA to create a portfolio of approximately €230 million in 100% green mortgages. These mortgages are intended for individuals and property developers so that they can finance energy efficiency projects and the construction of near-zero emission buildings in Spain. The goal is to improve access to finance for climate action investments.
“We are delighted to be collaborating with BBVA to promote the construction and renovation of sustainable housing in Spain and other investments in energy efficiency and business competitiveness. These credit lines will enable Spanish small and medium businesses and mid-caps to develop more efficient and affordable residential building projects that comply with sustainability standards. They will also increase the availability of financing to support investments that enhance competitiveness, drive growth and create jobs,” said Gemma Feliciani, director of Financial Institutions at the EIB.
“These two investments are a clear demonstration of our commitment to supporting the green transition and the competitiveness of Spanish small and medium businesses. They are also excellent examples of how securitisation activity can mobilise resources from private investors and strengthen the savings and investment union, in line with the European Union’s strategic priorities,” said EIF Chief Executive Marjut Falkstedt.
“The two agreements signed with the EIB Group will enable us to continue supporting small and medium businesses in their growth and development, while helping entrepreneurs to take their first steps. We will also promote environmental initiatives by financing sustainable housing. Both transactions are part of BBVA’s strategic priorities, which include becoming the leading bank for businesses and promoting sustainability as an engine of growth,” said Ignacio Fernández Palomero, head of Capital and Active Balance Sheet Management at BBVA Group.
These agreements with BBVA once again demonstrate the EIB Group’s role in promoting financial instruments like securitisation transactions, helping to unlock capital to boost projects that support small and medium businesses, reduce risk exposure for financial institutions and strengthen the EU capital markets union, which is one of the EIB Group’s eight strategic priorities. They will also contribute to other EIB Group strategic priorities, including climate action and environmental sustainability, economic, social and territorial cohesion, and support for sustainable housing across the European Union.
Transactions in detail
The EIB Group’s investment in the first securitisation of a consumer loan portfolio aims to address the financing needs of businesses and entrepreneurs. The senior tranche amounts to €600 million, comprising a €400 million EIB investment and a €200 million bilateral EIF guarantee to ING. The securitisation meets the simple, transparent and standardised (STS) criteria in line with EU securitisation standards, helping to foster a robust and efficient capital market.
In the synthetic securitisation of a mortgage loan portfolio, the EIF will cover losses in the upper mezzanine tranche, amounting to approximately €115 million. A portion of this risk is counter-guaranteed by the EIB (risk-sharing arrangement of €85 million covered by the EIB and €29.5 million by the EIF). Under this structure, private investors will cover losses in the lower mezzanine tranche while BBVA will retain the junior and senior tranches. This encourages collaboration between private and public investors in the securitisation market, promoting market integration and advancing the savings and investment union. The tranches are amortised on a pro-rata basis but may be subject to sequential amortisation depending on how the portfolio performs.
Both transactions aim to increase private investor participation in the securitisation market and advance the savings and investment union.
From left to right: Karen Huertas, head of Securitisation South and West Europe at the EIF, Gemma Feliciani, director of Financial Institutions at the EIB and Ignacio Fernández Palomero, head of Capital and Active Balance Sheet Management at BBVA Group.
Why don't you drop your comment here?