Spain’s BBVA has closed its first balance sheet synthetic securitization of a project finance loan portfolio. This a transfer of risk to institutional investors Alecta and PGGM that allows the bank to free up 80% of the capital on a portfolio of project loans that will remain on the bank’s balance sheet.

BBVA has closed a risk sharing transaction with Alecta and PGGM for a project finance loan portfolio worth 500 million euros. This portfolio represents a variety of projects, mainly in Spain and Western Europe, with one third of the portfolio consisting in renewable energy related projects, as that has been a clear focus in BBVA origination activities. The bank retains a risk alignment of minimally 20% for each project in the portfolio.

The transaction also establishes a framework for future collaborations with institutional investors PGGM and Alecta, which rely on BBVA’s origination capabilities to continue investing and provide the bank with capital that will allow it to continue promoting projects that help combat climate change.

BBVA has been actively using credit risk sharing to capitalize their small- and medium-size lending activities, and is now expanding this to its project finance loan book. This is a further step in the sophistication of risk management in its wholesale banking business. 

Original Story: Webwire | PR 
Photo: BBVA website
Edition: Prime Yield