The Standards, Productivity and Innovation Board of Singapore (SPRING) and DBS Bank completed last week a S$101.7 million ($63.2 million) CLO issued through the SME CreditAssist vehicle.
The deal is backed by a static pool of 492 secured and unsecured loans extended to 400 small and medium sized entities in Singapore.
Funding source
SPRING's objective for the transaction, conceived at the end of 2004, is to increase the range of funding available to SMEs and to act as the pilot issue for future offerings.
The loans, originated over the past nine months, were funded through the SPRING Access Loan warehousing facility established in April 2005 by DBS. The bank will also service the loans and handle the placement of the CLO.
Deal ratings
Fitch Ratings and Standard & Poor's assigned triple-A ratings to the S$68 million senior tranche; which priced 50 basis points over Sibor for a 1.7-year average life. The AA-rated S$7 million B tranche ended 80 basis points over Sibor for 3.7-years, the S$6 million C-class paper - rated A - offered an 115 point spread over 4.1 years and the S$3.25 million triple-B bonds came at 180 points over Sibor.
All four rated tranches have a legal maturity of 10 years. According to DBS, all the bonds were fully subscribed at launch. In addition, the deal features a S$16.5 million equity piece that has been bought by SPRING and DBS.
"In our effort to facilitate SME's access to financing, we identified loan securitization as a possible new instrument to help them," explains a well-placed source. "We hope this program will encourage more securitization of SME loans so more companies benefit."
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