Deutsche Bank has securitized $227.5 million in revenue from short-term trade finance assets, placing a first-loss layer of risk with a syndicate that includes institutional investors from North America, the bank announced.
Deemed compliant under the European Union's "Simple, Transparent & Standardised" regulations, TRAFIN 2023-1's provides credit protection to $3.5 billion in underlying trade receivables that could also include accounts receivables, letters of credit, guarantees and trade-based financing, assets that are short-term and revolving, according to the company.
TRAFIN 2023-1 essentially replaces the TRAFIN 2018-1, which reached maturity in November 2023. It is also a synthetic securitization, where the assets remain on the originator's portfolio instead of being transferred to a risk-remote entity, like a trust.
The $227.5 million is the TRAFIN 2023-1's entire securitization amount and is the first-loss tranche, making the investor syndicate the deal's risk counterparty, according to the company. Currently the program's fifth iteration, the deal has a 3.5-year scheduled maturity, and the underlying pool's weighted average life is about 90 days.
Deutsche originated the underlying assets, and arranged, structured and placed the securitized debt, and it will finance new trade finance assets under this synthetic securitization as older assets mature, according to a company spokesman. There is also one senior tranche that represents 93.5% of the underlying assets, Deutsche said. None of the notes were rated.
"The continuation of this landmark securitization program—now in its fifth iteration—allows our trade finance business to originate a greater volume of transactions in the space … helping us to power the real economy and develop local communities," according to a statement from Oliver Resovac, Deutsche Bank's global co-head of trade finance and lending.
