By Cristal Cody
Eureka Springs, Ark., Aug. 24 – Nordea Bank AB announced on Wednesday that it completed an €8.4 billion corporate and SME loan securitization transaction.
The selected portfolio consists of about €8.4 billion in corporate and SME loans from more than 3,000 borrowers across Sweden and Denmark and spread across a range of industries and asset classes.
The transaction was arranged by joint structuring advisers Barclays, J.P. Morgan Securities plc and Nordea Markets.
Nordea Bank said it entered into a synthetic risk transfer trade related to €8.4 billion of Nordea’s loan portfolio. Under the transaction, investors have agreed to invest in notes linked to the junior credit risk of the portfolio.
In contrast to an outright sale of loan portfolios, no assets will be derecognized from Nordea’s balance sheet and Nordea will continue to service the loans and maintain all of its customer relationships.
Under the agreement, the buyers of the notes are responsible for a pre-agreed amount of incurred credit losses of the reference portfolio. Nordea Bank said the size of the credit loss protection is sufficient to cover expected and unexpected losses, relieving the company from associated risks.
Nordea will retain a share of each of the underlying loans in the portfolio.
The company started work on the transaction in the first quarter of 2015.
Nordea Bank is a financial services group based in Stockholm.
| Issuer: | Nordea Bank AB
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| Amount: | €8.4 billion
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| Structure: | Corporate and SME loan securitization
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| Arrangers: | Barclays, J.P. Morgan Securities plc, Nordea Markets
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| Announcement date: | Aug. 24
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