UniCredit Markets & Investment Banking's euro-denominated ABCP conduit named Salome Funding got the green light from the European Central Bank (ECB) to begin using its repo facility.
The program is the first in the ABCP market that has achieved ECB eligibility.
The ECB requires that ABS used for repo follow certain requirements. Notes must rank senior in the capital structure, be denominated in euros, be issued from the European economic area, be considered true-sale, be enforceable against any third party and be structured to remain outside the reach of the originator and its creditors in the event of the originator's solvency.
The cash flows behind the ABS must not be backed by credit-linked notes or similar claims resulting from the transfer of credit risk via credit derivatives. The ECB has no minimum rating requirement, but requires only that the bonds be senior in ranking.
"This is another proof of the asset quality of our ABCP program and a unique opportunity to optimize the funding structure," said Reiner Ulrich, director and head of ABCP conduit management securitization at the bank. "Salome Funding benefits form the conservative business approach of UniCredit and has therefore never experienced any defaults and is not invested in any kind of U.S. exposures."