Sector developments and company hires

Innovative SME securitisation fund inked
SGR-CESGAR, the Spanish guarantee society (SGR) association, has launched a pioneering securitisation fund that aims to provide Spanish SMEs with access to the capital markets. Dubbed Aquisgrán, the programme is structured by Intermoney and backed by the Ministry of Industry through CERSA, with initial financing from the EIF, Instituto de Crédito Oficial (ICO) and Banco Caminos.

Aquisgrán represents a new approach to SME financing in Europe that could be scaled-up and allow investors to achieve direct exposure to SMEs. Under the initiative, financing will be commercialised by SGRs and funded via loans of around €100,000, guaranteed by SGRs and benefiting from a counter-guarantee from CERSA. The loans will be funded initially by Banco Caminos, up to €20m, and subsequently by the issuance of €150m in securitisation bonds, progressively subscribed to by ICO with a bilateral guarantee from EIF.

The platform will also specifically provide support to SMEs contributing to sustainability and green transformation. The bonds will be listed on the Spanish alternative fixed-income market (MARF).

In the near future, Aquisgrán aims to also issue bonds subscribed to by private institutional investors.

In other news…

Aviation finance platform formed
KKR has launched AV AirFinance, a global commercial aviation loan servicer. The new platform combines stable, long-term capital and decades of experience structuring commercial aircraft loan transactions to offer creative and innovative financing solutions to commercial aviation customers around the world.

AV AirFinance is led by ceo Siggi Kristinsson, who most recently co-founded and served as ceo of Volito Aviation Services, a company providing debt origination and advisory services to a number of financial institutions. Ryan Jasinski joins the AV AirFinance team from CIT as part of a related portfolio purchase and will continue to focus on loan origination in the Americas. Per Waldelof, former president of PK AirFinance, serves as a consultant advising on loan origination and other aspects of AV AirFinance’s operations.

To support the launch, KKR and AV AirFinance have agreed to purchase a circa US$800m portfolio of aviation loans from CIT Group, comprising over 50 loans secured by approximately 60 commercial aircraft. The loans in the portfolio have an average yield in the mid-single digits and an average remaining term of approximately four years.

The portfolio acquisition from CIT is being funded by separate accounts managed by KKR.

Climate disclosure recommendations released
The SFA has responded to the US SEC’s RFC on climate change disclosures with recommendations that it believes would facilitate a clear, consistent and standardised framework in connection with public securitisations over the next 18-24 months. The first recommendation is to establish a principles-based approach to the goals of climate disclosure, including establishing the objectives of such disclosure, in order to allow market participants to determine which specific data or other disclosures should be provided.

Second, existing standards should be leveraged, while tailoring them to the securitisation markets given the unique structures and underlying assets of such issuances. In particular, climate risk should be evaluated at both the transaction level and the collateral level, while the applicability of certain climate data between asset classes should be taken into consideration.

Finally, the approach should be phased in over time, given that the market for such issuances is at a nascent stage. “Overly prescriptive rules that come into existence before the securitisation industry coalesces around them risks hampering the development of the green securitisation market to the point where there is no issuance at all,” the SFA warns.

Cyprus NPE ratio declining
The non-performing exposure (NPE) ratio in Cyprus stood at 17.7% in December 2020, declining by almost 10 percentage points from 28% in December 2019, according to DBRS Morningstar figures. Overall, from its peak in May 2016 at 49%, the NPE ratio has dropped by roughly 31 percentage points - mainly due to the transfer of the Cyprus Cooperative Bank's (CCB) non-performing assets to the state-owned asset management company KEDIPES in 2018, and more recently due to non-organic solutions and write-offs.

The significant reduction in 2020 is largely attributed to: transactions totalling €2bn by Bank of Cyprus (known as Helix 2 - Portfolio A and Velocity 2 (SCI 5 August 2020)) and Alpha Bank; write-offs of around €1.1bn mainly by Hellenic Bank; and the remainder through organic solutions. Another transaction of €500m, mainly made up of retail and SMEs loans, was completed in January 2021 by the Bank of Cyprus.

EMEA
HIG Capital has expanded its European WhiteHorse team with the addition of Sebastian Lorenz as principal and head of the DACH region. Lorenz has 11 years of experience in direct lending and corporate finance. He was previously a director in Barings’ private finance division and has also worked for Ares Management.