BBVA completes record €2bn synthetic securitisation to boost project finance capacity
BBVA has executed the largest synthetic securitisation transaction backed by a project finance portfolio in its history, referencing a €2 billion portfolio of loans.
The portfolio comprises financing for projects in digital infrastructure, renewable energy, transport infrastructure and other public services, mainly located in the United States and Europe. The transaction enables BBVA to release close to 80% of the initial regulatory capital associated with the portfolio, increasing the bank’s capacity to continue financing corporate clients and supporting economic activity.
The transaction has been structured as an on-balance sheet synthetic securitisation, through which BBVA transfers part of the portfolio’s credit risk to institutional investors while retaining the underlying loans on its balance sheet. These structures allow the bank to optimise the use of regulatory capital, strengthen balance sheet efficiency and increase lending capacity to support the real economy.
The transaction also features an innovative hybrid structure combining a funded first-loss tranche with an unfunded mezzanine tranche, designed to optimise capital efficiency while addressing investor demand.
This is BBVA’s fourth synthetic securitisation transaction referencing its project finance portfolio and forms part of the bank’s active balance sheet management strategy, within its value creation and capital generation strategic priority.
BBVA has also completed an STS securitisation (Simple, Transparent and Standardised under the European Union framework) referenced to a portfolio of car purchase loans, with a value of €1billion.