Citigroup Closes Innovative Trade Loan Securitization Programme
Hong Kong – ABS Global Finance PLC has issued the world's first rated securitization of trade loans. The US$198.9m Regulation S / Rule 144A transaction was launched off a global programme, called the Citigroup Corporate and Investment Banking Asset Backed Securities Issuance Programme (the "CABS Programme"). Citigroup Global Markets was the lead manager and arranger for the issue.
In this maiden transaction, ABS Global Finance issued notes backed by corporate and commercial trade finance loans originated by Citigroup's Global Transaction Services units in Hong Kong, Singapore and Taiwan. A total of five classes of notes were sold under the CABS Programme in Series 2006-1, all of which were publicly rated by Standard & Poor's and Fitch Ratings. A US$ 186 million triple-A rated A-1 class was sold at one month Libor plus 0.10%, a single-A rated C-1 class raised US$ 7 million at one month Libor plus 0.50%, and a triple-B rated D-1 class raised US$ 3 million at one month Libor plus 1.00%. A double-B rated E-1 class raised US$ 2 million and a single-B rated F-1 class raised US$ 0.9 million. An unrated equity tranche of US$ 1.1 million was retained by Citigroup.
The CABS Programme is a first of its kind in the securitization markets. The multi-jurisdictional structure enables Citibank entities domiciled in selected countries in Asia, Latin America, Europe and the Middle East to sell trade loan assets via an Offshore Trust. The Offshore Trust then sells investor certificates backed by the commingled pool of assets to ABS Global Finance, which can issue either single issuance or multiple issuance series to global investors.
"We're pleased to bring this innovative offering to the market. These types of transactions will allow us to continue to provide our trade clients with competitive pricing by freeing up risk capital for future transactions," said Claudia Slacik, Global Head of Trade Services and Finance, Citigroup Corporate and Investment Banking.
Investors from both the US and Asia subscribed to the landmark deal, underlining the continued appetite from global investors in new asset classes. "This innovative transaction was well received by investors due to its unique profile of high quality assets and risk diversification by country, industry and obligor. Citigroup's commitment to the development of a long term and sizable programme was also a key consideration for many investors," said John Dahl, head of Asia Pacific Securitization for Citigroup.
"Citigroup's trade business has experienced outstanding growth in the past two years fueled by Asia's accelerated export volumes and the CABS Programme supports the bank's continued trade expansion through portfolio optimization," said Amita Jhangiani, head of Trade in Asia for Global Transaction Services.
Following the success of the first deal, it is expected that new series will be launched over time with the addition of trade loan assets from new countries into the portfolio.
Citigroup Corporate and Investment Banking
Citigroup Corporate and Investment Banking is the most complete financial partner to corporations, financial institutions, institutional investors and governments in the world. As a global leader in banking, capital markets, and transaction services, with a presence in many countries dating back more than 100 years, Citigroup Corporate and Investment Banking enables clients to achieve their strategic financial objectives by providing them with cutting-edge ideas, best-in-class products and solutions, and unparalleled access to capital and liquidity.
Citigroup (NYSE: C), the leading global financial services company has some 200 million customer accounts and does business in more than 100 countries, providing consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management. Major brand names under Citigroup's trademark red umbrella include Citibank, CitiFinancial, Primerica, Smith Barney and Banamex. Additional information may be found at www.citigroup.com