IKB and KfW close EUR 2.4 billion transaction via the PROMISE securitisation platform
IKB Deutsche Industriebank AG and KfW
Bankengruppe yesterday closed the PROMISE-I Mobility 2006-1
transaction, securitising EUR 2.4 billion in loans to medium-sized
enterprises. The exposure was securitised synthetically, allowing IKB
to maintain the loans on its books and to continue the related
business relationships with its clients.
PROMISE-I Mobility 2006-1 is the sixth transaction jointly concluded by IKB and KfW: IKB thus continues to pursue its strategy of actively managing its credit portfolio, comprising an attractive mix of existing exposures and new business. The relief on regulatory and economic equity provided by the securitisation provides IKB with additional scope for new loans to medium-sized businesses.
The PROMISE-I Mobility 2006-1 portfolio comprises 946 individual loans to 614 medium-sized enterprises, with a maximum term of 8 years. In a synthetic securitisation, KfW assumes the default risk exposure of IKB's underlying credit portfolio, subsequently placing the risk on the capital market.
The transaction was arranged by Deutsche Bank AG, who lead-manages the placement in the international capital and swaps markets. The Credit-Linked Notes (CLNs) issued on the capital market in connection with the securitisation were rated by Moody's and Fitch. The transaction was priced on 24 November 2006.
Being the first joint IKB/KfW securitisation transaction using a German special purpose entity as the CLN issuer, PROMISE-I Mobility 2006-1 also strengthens the German financial marketplace.
IKB and KfW had used the PROMISE platform to place IKB's first portfolio of exposures to medium-sized businesses at the end of 2000: In the meantime, IKB has placed an aggregate nominal volume of EUR 11.8 billion through securitisation platforms managed by KfW.
With this transaction KfW concludes this year's activities in the area of securitisation of SME loans. The total volume of transactions launched in 2006 to securitise risks from SME loans amounts to approximately EUR 10 billion. This is the highest annual figure recorded since the securitisation platform was set up in 2000.