LONDON, Aug 22 (IFR) - BNP Paribas is taking part of its
commodity trade book off balance sheet, in a new deal called
Lighthouse Trade Finance 1, reviving the "originate to
distribute" business model.
It has sold a securitisation of USD131.6m of commodity
transport receivables, the first in a planned series of deals
from the bank's Energy and Commodities group. The deal removes
the receivables from the French bank's accounting and regulatory
balance sheet, which should allow it to originate more commodity
trade finance than its increasingly constrained balance sheet
In contrast to pre-crisis deals, however, it will retain 5%
of the risk, as a result of European rules designed to align
bank interests with their deals.
For BNP Paribas's clients, the commodity trading houses that
generate trade receivables, a deal like this connects them
directly to the capital markets in secured format.
Subordinated paper in the new vehicle has been subscribed by
Lord Capital, a specialist institutional investor in trade
finance deals. It said it is buying the entire subordinated
tranche, and will be the controlling class for the entire
Although this deal is only USD131.6m, Lord says its deal
could ultimately be on a USD3bn book. BNP Paribas's total
commodity trade financing business is around USD20bn.
The deal is structured a little like a mortgage master trust
- there is a master issuer vehicle, and subsidiaries for each
series of notes. Assets are grouped by type, rather than by
client, with multiple client receivables originated by BNP
Paribas (Suisse) backing each issuance.
The first issue is limited to crude oil, oil products,
ferrous or non-ferrous metals, coal and fertilizers or alloy
Transaction structure is a USD100m senior tranche, to be
rated AAA by Fitch, paying one-month Libor plus 85bp. This is
subscribed by a single investor.
There is also a USD20m Class B paying one-month Libor plus
300bp, a USD5m subordinated tranche paying one-month Libor plus
1000bp and sub notes additional coupon (targeted at 475bp per
annum) and USD6.6m of sponsor retention notes.
The latter will be held by BNP Paribas to fulfil the EU's
Article 122a risk retention rules.
All tranches have an expected maturity of August 2015 and
final maturity of August 2017.
The bank said: "This transaction will ensure more liquidity
in the commodity transportation market and will give investor
clients access to a new asset class. Part of the bank's
originate and distribute strategy, this particular deal marks
the beginning of a series of similar transactions for BNP
Paribas Energy & Commodity Finance".
(Reporting By Owen Sanderson, editing by Alex Chambers and Anil