London, Frankfurt 03 December 2018
TRAFIN 2018-1 will refinance Deutsche Bank’s third synthetic collateralised loan obligation, TRAFIN 2015-1, which was launched in 2015 at US$3.5bn
Three years on from the announcement of the US$3.5bn collateralised loan obligation (CLO), TRAFIN 2015-1 – the largest ever securitisation of trade finance assets at the time – Deutsche Bank has issued a further iteration of the transaction, TRAFIN 2018-1. Issued in response to strong investor demand, TRAFIN 2018-1 will refinance TRAFIN 2015-1.
With a view to buying credit protection on the underlying portfolio, Deutsche Bank has structured and placed a first loss tranche of US$216.125m (6.5%) with key institutional investors, who take on the risk of absorbing initial losses in return for higher yield.
The securitisation of trade finance has been gradually gaining traction with institutional investors owing to the asset class’s low default rates, diversity and granularity – providing additional sources of trade finance capital. “The strong demand shown by investors and their commitment to remain invested in our business for a further period of up to five years shows investors’ confidence in the continued low default rates and high performance of DB’s trade finance
business,” says Jonathan Lonsdale, Head of Securitisation and Repackaging for Trade Finance Assets at Deutsche Bank, who led the transaction.
Guy Brooks, Global Head of Risk and Portfolio Management, Deutsche Bank, Global Transaction Banking, adds, “This transaction shows our commitment to this method of hedging and, indeed, to expanding the amount of hedging that we do through this means. We expect to execute more CLOs as time goes by. This type of transaction allows us to scale the amount of hedging we do, allowing for aggressive growth of the portfolio and, ultimately, increased amounts of trade finance funding for our clients.”