CIP Securitisation Window

General Principle

Under the Securitisation window, EIF provides EU Guarantees in respect of low layers of credit enhancement in the context of both cash and synthetic SME securitisation transactions. The objective is to facilitate access to capital markets for unrated or low rated institutions, such as smaller banks. The aim of the CIP Securitisation product is to generate additional financing for SMEs.

In exchange for the EU Guarantee, originators undertake to create a new portfolio of SME financing during an agreed period (known as the Additional Portfolio). The required size and composition of this portfolio depends on the size and the seniority of the EU Guarantee, but it shall be at least 50% of the portfolio that is securitised. The Additional Portfolio must only contain medium- or long-term financing to SMEs.

The Product

Depending on the nature of the transaction, the EU Guarantee can be in the form of:

• a wrap provided for the benefit of the noteholders
• a bilateral guarantee
• a credit default swap or other equivalent instrument

Main Product Features

• Guarantee rate: up to 100% of the guaranteed tranche, except for the First Loss Piece (guarantee rate limited to 50%)
• Fees: the beneficiary of the EU Guarantee will be required to pay a fee. In addition, a commitment fee may be charged as an incentive to encourage the establishment of the Additional Portfolio.
• Guarantee maturity: up to 10 years.
• Eligibility Criteria:
  • Underlying assets: at least 70% of the securitised portfolio must be composed of SME financing.
  • EU Guarantees support securisations with innovative features, such as: less customary underlying assets; underlying assets originated in multiple countries, or countries where the securitisation market is less developed; multi-seller origination; first-time originators; etc..
  • External rating by at least one major rating agency required.