BBVA France funds two cruise ships for Royal CaribbeanJuly 4, 2016
BBVA, along with 5 other banks (CITI, HSBC, Société Générale, Santander and SMBC) will take part in the funding of two cruise ships for Royal Caribbean. The total amount of funding is 1.3 billion euros. The two high-end cruise ships are highly innovative and will be built by STX France in Saint Nazaire. Their delivery is planned for 2018 and 2020. The deal has credit insurance cover from Coface, acting on behalf of the French government.
On this occasion, BBVA France has decided to use the new system for refinancing export credits created by SFIL, a structure promoted by the French State and with 100% public capital. In September 2015, BBVA France was one of the first banks to sign the memorandum of agreement with SFIL.
What makes this refinancing system by SFIL unique is equal treatment among banks, since all those taking part in the export credit must be able to benefit from this placement system. There is also equal treatment with respect to the committed sums: for a bank to be able to participate in a buyer credit refinanced by SFIL, the total amount of the credit awarded to the foreign buyer must be at least 70 million euros. Once these conditions have been met, SFIL can refinance up to 95% of a bank's stake with respect to the buyer credit.
"Should a system of this kind have existed, it would have been very valuable when between 2011 and 2013 commercial banks experienced a net deterioration in their finance conditions. They faced all kinds of difficulties for granting long-term funding to companies. Back then, French exporters were penalized in relation to their foreign competitors from countries where public financing or refinancing mechanisms existed" mentioned David Peyroux, head of Global Trade & International Banking at BBVA France.
In addition, the implementation of the SFIL mechanism is closely associated with the banks' wish to apply an 'originate to distribute' model to export credits. It also allows them to take the refinanced part off their balance sheet, so has no effect on their regulatory ratios.
The BBVA France team believes that the SFIL mechanism is a very useful lever for continuing to carry out their activity in the export credit segment in the French market. "In addition to the competitiveness of the refinancing cost, SFIL's support enables us to take larger stakes in buyer credits. With this mechanism we are less reliant on market liquidity and, at the same time, it helps us be less dependent on the bank's liquidity", concluded David Peyroux.