30.06.2003 – 14:05
KfW and HVB Group new securitization
PROMISE transaction launched with volume of EUR 1.13bn
Today, HVB Group, together with joint bookrunner Citigroup Global Markets Limited, launched its fourth asset-backed securities transaction under the KfW PROMISE program. The transaction, named PROMISE Color-2003-1 Plc, has a total volume of EUR 1.13 bn, of which EUR 238 m will be placed in the capital markets in the form of ABS notes. This transaction is a further step by HVB Group towards a successful implementation of its Transformation Program 2003.
Using the KfW platform will enable HVB Group to achieve regulatory capital relief, thereby creating capacities for new loans to the German Mittelstand customers, the credit risk of which could then also be securitized through potential future transactions.
Within the scope of the Promise Color-2003-1, the credit risk attached to loans that have been extended to middle-market German companies is transferred to the capital markets. This transaction differs from its predecessors in that each loan is collateralized by mortgage (i. e. a land charge). The portfolio comprises approximately 1,500 loans to nearly 750 borrowers and is highly diversified in terms of sectors, borrowers and regions. The average size of the loans is EUR 770,000; loan seasoning is roughly 8.57 years which is yet another indicator for the strong quality of the portfolio. Over 90% of the loans are amortizing.
Promise Color is a synthetic transaction in which - unlike a true sale transaction with its additional funding benefit only the credit risk of the underlying is securitized. The credit risk is transferred to KfW via a loan loss agreement. KfW hedges itself in the capital market through Super Senior Swaps and Notes sold on the capital market. The transaction has a weighted average life of 4.5 years.
Last year HVB Group strengthened its securitization and placed assets of EUR 20.5bn on the capital market, thus freeing up weighted risk assets of EUR 12.5bn. Under the Transformation Program 2003, further strong expansion of securitization activities is planned.
ots Original Text Service: KfW Internet: http://www.presseportal.de
For further informations:
KfW Group - Ms. Nathalie Drücke Phone: +49(0)69 7431-2098; E-Mail: firstname.lastname@example.org
HVB Group - Dr. Knut Hansen Phone: +49(0)89 378-24644; E-Mail: email@example.com
Original content of: KfW, transmitted by news aktuell