Commerzbank plans to launch an alternative funding platform for German small-to-medium sized firms that will give these businesses access to Schuldschein - borrower notes typically only accessible to larger German corporations.
Under an asset-backed lending program Commerzbank will pool together the borrower notes from a number of German companies and, once sufficient volume is generated, these bonds will be issued into the capital markets to replace the interim funding of the Schuldschein portfolio. The origination process was slated to begin last Friday.
German enterprises do not have direct access to the capital markets and have historically relied on the banking market for funding. But over the years several German banks have worked on platforms allowing these companies indirect access to alternative sources of financing, such as securitization.
Commerzbank said that under its latest initiative, the bank expects to pool together the two- to five-year funding needs ranging between 500,000 and 5 million of various enterprises across different industries into a single, well diversified portfolio, making them suitable for securitization. Commerzbank will act as both lender and arranger and will provide the interim funding until securitization volume is generated.
"In general there has been a growing sentiment that the German market is over-banked, and that [small-to-medium sized enterprises] don't have difficulty in funding themselves," said one source at Commerzbank. "This may apply to the larger segment but for those that are not that large in size, they still have a need for diversification and struggle to find funds."
Commerzbank said that its new Schuldschein platform is designed to service these smaller sized enterprises that have a need but no access to a long term funding platform. A bank spokesman said there has been good demand for this product and that the bank planed to access the securitization market on a regular basis. The first securitization structure is expected in the first months of 2006.
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