Credit enhancement

The general purpose of EIF's credit enhancement operations is to support new SME financing. EIF focuses mainly on deals backed by SME financing, although it does not exclude other asset classes.

Examples of SME financing securitised with the help of EIF:

• SME loans, SME loan guarantees
• Small ticket lease receivables
• SME trade receivables
• Venture financing (lease/loans)
• Micro loans

EIF guarantees senior and/or mezzanine tranches of risk, typically with a minimum rating equivalent to BB/Ba2.

The EIF guarantees are provided in different forms, such as wraps, bilateral guarantees, credit default swaps, etc.

The EIF guarantees facilitate the execution of securitisation transactions, allowing financial institutions to diversify their funding sources and/or to achieve economic and regulatory capital relief via credit risk transfer:

• Asset-backed securities wrapped by EIF are assigned its AAA/Aaa/AAA rating.
• EIF can sell protection on the underlying portfolio itself, e.g. directly to the benefit of the originator in synthetic deals.
• Credit risk transfer and capital relief - through the placement of notes with cash investors or otherwise - are further facilitated by the zero risk-weighting assigned to assets guaranteed by EIF (Basel II), thanks to its Multilateral Development Bank status.
• The EIF guarantees are offered at competitive prices, after a detailed analysis of the transaction and of the originator.

EIF may conduct its activities in the territory of the Member States of the European Union, in candidate and potential candidate countries to the European Union and in the European Free Trade Association (EFTA) countries.

Recently, EIF has been mandated by the European Commission to participate in securitisations using EU funds from the CIP - Competitiveness and Innovation Framework Programme 2007-2013.

TRUE SALE TRANSACTIONS

EIF guarantees on ABS are provided in different forms, such as wraps or bilateral guarantees to the noteholders.

Examples of true sale securitisations from EIF's track record:

SYNTHETIC TRANSACTIONS

In synthetic transactions, EIF can either guarantee Credit Linked Notes to investors or sell protection on the reference portfolio directly to the originator.

Examples of synthetic transactions from EIF's track record: