Deutsche Bank has recently announced the successful closure of the TRAFIN 2023-1 issuance, the bank’s fifth iteration of synthetic securitisation. This issuance aims to provide credit protection for an underlying portfolio of trade finance assets worth $3.5 billion.
The bank has managed to structure, arrange, and place a first loss tranche of $227.5 million with a syndicate of institutional investors from both Europe and the Americas. This issuance comes after the maturity of TRAFIN 2018-1, the bank’s previous trade finance securitisation, which took place in November 2023.
The synthetic securitisation transaction has a scheduled maturity of 3.5 years, with the weighted average life of the initial pool estimated to be around 90 days. New trade finance assets will be chosen to replenish the portfolio on a monthly basis as the short-term assets mature and the pool amortises, based on pre-set conditions.
Oliver Resovac, Global Co-Head of Trade Finance & Lending at Deutsche Bank, expressed the bank’s commitment to opening trade finance assets to capital markets. He stated, “The continuation of this landmark securitisation program – 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.”
It’s noteworthy that TRAFIN 2023-1 is one of the few synthetic securitisations issued by Deutsche Bank that complies with the European Union’s “Simple, Transparent & Standardised” standard. This compliance enables higher overall capital relief and tighter pricing for the bank.
The issuance comes at a time when trade finance as an asset class has been gaining traction among institutional investors. By investing in securitised tranches referencing traditional short-term trade finance products such as letters of credit and accounts receivables, investors can gain exposure to a global portfolio diversified across products, industries and client types.
The asset class is known for its low default rates, self-liquidation, and short tenors, making it a stable, attractive, and relatively scarce asset class for capital market investors.
Deutsche Bank also revealed its plans to expand into other forms of capital market investment products for trade finance, in response to strong investor demand. These include funded risk-sharing arrangements, traditional working capital, and documentary trade facilities, among others.
Oliver Resovac further added, “Going forward, we believe these products will play an increasingly important role in providing additional sources of capital.”
The successful closure of the TRAFIN 2023-1 issuance reflects Deutsche Bank’s commitment to facilitating trade finance and opening up opportunities for capital market investors. The bank’s rigorous compliance with EU standards and its plans for future expansion in the sector mark a significant step in the evolution of trade finance as a lucrative asset class.
+ There are no comments
Add yours