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A version of this article first appeared in Total Derivatives. Total Derivatives is the prime source of real-time news and analysis of the global fixed income derivatives markets. |
In the second such venture between the German state-guaranteed funding agency and Sumitomo Mitsui Banking Corp Europe (SMBCE), KfW has again provided the platform for a securitization of PFI deals by SMBCE. The collateralized loan obligation deal is a victory for fans of structured finance transactions but also quite a good thing for ordinary people in the UK, and elsewhere, who expect one day to go to hospital, or perhaps to send their children to school.
The Smart PFI 2007 synthetic securitization transaction was co-arranged by Deutsche Bank in London and consists of a SMBCE-originated portfolio of 46 senior secured loans from 34 UK PFI/PPP projects. The loans in the portfolio are used to finance a range of hospitals and healthcare facilities (41.4%), schools (38%) and a wide variety of other public infrastructure projects (20.6%).
Part of the risk on the SMBCE balance sheet of this £388.8 million portfolio has synthetically been transferred to international investors via KfW by means of CDS (92%) and credit-linked notes (6.3%).