BNP Paribas Corporate and Institutional Banking announces that it has completed a first of its kind securitisation of commodity trade finance loan receivables. Lighthouse Trade Finance Issuer I Ltd is a USD 131.6m transaction arranged, originated and managed by BNP Paribas and rated AAA by Fitch. This transaction will ensure more liquidity in the commodity transportation market and will give investor clients access to a new asset class. Part of the Bank’s originate and distribute strategy, this particular deal marks the beginning of a series of similar transactions for BNP Paribas Energy & Commodity Finance.
Lighthouse Trade Finance Issuer I Ltd is the first issuance from a platform, Lighthouse Trade Finance Master Ltd, which was set-up to distribute commodity finance assets originated by the Group to investors. The debt is backed by short-term loan advances granted to corporates for the financing of physical commodities trade flows, such as the shipment of oil and metal-based products, mostly by vessels or pipelines. This financing covers the funding gap between the payments to the suppliers and the receipt of the final buyers’ payments.
Dominique Remy, Head of Corporate Banking Europe said:
“The Lighthouse platform is an excellent illustration of our originate and distribute business model, which is to continue serving our corporate clients whilst managing our balance sheet exposure. As a world leader in commodity finance, we strive to offer an enhanced range of credit solutions to meet the requirements of our client base, and at the same time to open our product range to institutional investors.”
Commenting on the transaction, Frédéric Janbon, Global Head of Fixed Income said:
“Banks have had to adapt the way they do business in recent years. This platform is a great example of collaboration between our Fixed Income and Corporate Banking businesses, providing investors with access to a new asset class that is key to the economy, representing around 30% of world exports.”
The Lighthouse platform will be managed, and the portfolio selected and allocated, by Energy & Commodity Finance according to strict criteria.
The assets of the Lighthouse platform are short-term, typically 15 to 90 days, and have experienced low credit losses historically. They share many similarities with trade receivables, but also differences as they are interest-bearing instruments.
The capital structure of Lighthouse is made up of a Senior A Loan for USD 100m rated AAAsf, unrated Class B Notes for USD 20m and Subordinated Notes of USD 5m. There is also vertical retention of an economic interest of 5% through the USD 6.6m Sponsor Notes, aligning interest with investors.
BNP Paribas is a world leader in commodity finance, globally ranking among the top three largest commodity finance houses in recent years, with extensive coverage across regions, clients and commodities.
The sector is a global and growing market requiring large and recurrent financing needs. A strategic sector for both developed and growth economies, it represents around a third of total world exports, a main access to hard currencies and a strong employment stimulus for local economies.