Dutch financial institution ING Bank has prepared an asset-backed commercial paper conduit called Simba Funding Corp., which will provide credit default protection on the bank's assets. The unusual structure, not seen on the ABCP market for almost four years, appears to be a show of confidence that the country's banking regulatory policies will welcome synthetic ABCP structures under Basel II.
Simba Funding Corp. has a program limit of 40 billion ($50.7 billion), which can be issued in Europe or the U.S., according to people familiar with the situation. The vehicle will issue asset-backed commercial paper and use the proceeds to make loans to an SPV called Stichting Simba Securitization. The SPV will then use the loan proceeds to either purchase ING Bank's assets, or provide credit default swap protection to the bank referencing its assets.