23 December 2023
BBVA securitizes a portfolio of project finance loans with a notional of 750 million euros
In line with the bank's ESG strategy, BBVA has closed a new synthetic securitization transaction on a portfolio of project finance loans, of which 60% have been identified as sustainable. This is a risk sharing transaction with PGGM as investor, and allows the bank to release up to 88% of the portfolio's capital. The transaction also satisfies the quality criteria established by the EU for simple, transparent and standardized (STS) transactions, being one of the first European Project Finance transactions to achieve this qualification.
BBVA has closed a risk-sharing transaction with PGGM on a project finance portfolio valued at 750 million euros. Project finance is a loan structure for which repayments depend primarily on the cash flow of the project, with the assets, rights and interests of the project used as secondary collateral. 60% of the projects in the portfolio are classified as sustainable; the loans are aimed at financing projects in renewable energy, digital infrastructure, transportation infrastructure and other public services. The projects are mainly located in Spain, the rest of Europe, the United States and Asia-Pacific. As part of this operation, the bank transfers a significant portion of the credit risk of this loan portfolio to the investor, while remaining aligned with PGGM by retaining risk on a percentage of the portfolio, as the loans remain on the bank's balance sheet.
This represents the third synthetic on-balance-sheet securitization transaction performed by BBVA Corporate & Investment Banking with a view to capitalizing its lending activity to large clients and for the finance of projects of its main clients, both in Spain and abroad. The transaction satisfies the highest standards in terms of structuring as it meets STS (Simple, Transparent and Standardized) quality criteria, being one of the first European Project Finance securitizations to achieve this qualification.
PGGM has thus demonstrated its confidence in BBVA and continues to increase its Credit Risk Sharing (CRS) investment portfolio on behalf of PFZW, the 216.5 billion-euro pension fund for Dutch healthcare workers, since the end of 2006. It is one of the most recognized investors in the market, and it has extensive experience in this product.
Pablo Fenoll, head of the Portfolio Management unit at BBVA Investment Banking & Finance, explains: "This type of synthetic securitization operation has proven to be a very efficient tool in recycling regulatory capital, and allows us to continue financing the transition towards a more sustainable world."
Meindert de Jong, director Credit Risk Sharing at PGGM, comments: “We are thrilled to expand our highly valued relationship with BBVA by risk sharing in BBVA’s core project finance portfolio, which has a clear focus on renewable energy and other SDI aligned projects, and is therewith an excellent fit with the ambitions of our client PFZW.”