Sector developments and company hires

Sri Lanka eyes remittance securitisation

The government of Sri Lanka (GOSL) is requesting competitive proposals from banks and investors for consideration to be appointed as counterparts or arrangers for its proposed securitised financing arrangement (SFA). The arrangement would be backed by foreign currency receipts of the Central Bank of Sri Lanka (CBSL) under the mandatory sale of 10% of workers' remittances converted into Sri Lankan rupees by licensed banks.

Sri Lanka receives around US$7bn in workers' remittances annually. Since the introduction of the mandatory sale requirement on 28 May 2021, an average of US$25m per month has been accumulated by the CBSL. With recent focused efforts to strengthen remittance flows by the CBSL in collaboration with stakeholder agencies, such inflows are expected to increase in the coming years.

The proposed SFA would be denominated in US dollars, euros, Chinese Renminbi, Japanese Yen or in any Gulf Cooperation Council (GCC) currency. The SFA is expected to be raised at a fixed or floating rate for a medium-term tenor. Proceeds will be used to finance expenditure as approved in the annual budget of the GOSL.

Proposals should be submitted by 30 November.

In other news…

EMEA

ICG has appointed Marwan Farag as its new managing director of marketing and client relations for the Middle East. Farag has over 17-years of experience of raising capital in the Middle East, and will join the global alternative asset manager’s Dubai office from LGT Capital Partners. ICG has developed client relations across the Middle East for over 13-years, and they hope the new appointment will enable them to meet the rising demand from investors while continuing to serve existing client needs.

Simon Webb has joined LiveMore Capital as md - finance and capital markets, based in London. He was previously investment director at Pollen Street Capital and before that, worked at Bluestone Group, Prudential Assurance, Deloitte, Russell Investments and Towers Perrin.

Irish NPL portfolio sale inked

Permanent TSB is set to sell a loan portfolio to Morgan Stanley Principal Funding, which intends to securitise the assets following completion of the acquisition next year. The pool, which has a gross balance sheet value of around €390m, comprises loan accounts linked to 1,222 borrowing relationships. Loans to the value of €223m (accounting for 57% of the portfolio) were originated as home loan (private dwelling house) products and loans to the value of €167m (43%) were originated as buy-to-let products.

Of the loans, 98% are categorised as non-performing by reference to regulatory definitions and the remainder comprises loan products that were originated pre-2009 and are no longer available to new customers. Typically, these are interest-only or part capital and interest loans, where the borrower and the PTSB have failed to agree a plan to ensure the repayment of the outstanding balance at the end of the agreed loan term.

The loans within the portfolio will continue to be serviced by PTSB for a period of up to six months, after which legal title and loan account servicing will transfer to Pepper Finance Corporation (Ireland).  

The transaction will increase the PTSB's transitional Common Equity Tier 1 (CET1) Ratio by circa 60bp once fully completed. It also alleviates the negative impact of calendar provisioning associated with this portfolio and reduces the bank's non-performing loan ratio.

‘Use of proceeds’ support welcomed

The ECB last week published its opinion on the draft EU Green Bond Standard legislation, which has been welcomed by PCS, for one. In particular, in connection with securitisation, the organisation points to the ECB’s support for a definition of green that encompasses issuance where the proceeds are used by the originator to finance sustainable projects.

PCS highlights this in the context of the current debate as to whether the legal EU definition of sustainable securitisation should be limited to securitisations of green assets or could also cover – as is the case for all other capital market instruments – bonds whose proceeds are used to finance the transition to a sustainable economy. The organisation argues that the latter is both logically compelling and, more importantly, helps achieve Europe’s sustainability goals.

“In the context of the draft EU Green Bond Standard legislation, the intervention of the ECB is welcome not only for its support for the broader definition, but also at a technical drafting level by suggesting a clarification of the text,” PCS notes. “As currently drafted, the law may not allow a real ‘use of proceeds’ approach because of the ambiguity of the definition of proceeds for securitisations. The ECB has rightly suggested the ambiguity be lifted to clarify that proceeds of a securitisation in the hands of the originator may be used for green purposes and not, if one followed a technical narrow reading, only the proceeds in the hands of the SPV.”