EIF guarantees asset-backed bonds in Italian securitisation

The European Investment Fund (EIF) has provided a guarantee for the mezzanine tranche of a securitisation transaction of leases issued by Dolomiti Finance (Italy).

Originator of the securitised portfolio is Hypo Alpe Adria Bank SpA, the Italian subsidiary of the Austrian banking group, specialised in leasing operations.

The issue, for a total amount of ¬ 158 million, consists of 3 classes: two Aaa-rated tranches, a mezzanine tranche, guaranteed by EIF, and an unrated junior tranche. Arrangers are Bnp Paribas and Finanziaria Internazionale.

The portfolio consists of leases to small and medium-sized companies (SMEs) and the lion's share concerns enterprises operating in the northern part of Italy.

EIF as credit enhancer in securitisation deals

The involvement of the EIF as an external guarantor in securitisation transactions can be either in the form of credit support provided to the issuing Special Purpose Vehicle (covering potential cash shortfalls in the underlying portfolio of securitised assets) or to the holders of mezzanine and junior bond issues (guaranteeing interest and principal).

The securitised assets must be loans or leases predominantly granted to eligible SMEs, i.e. companies with less than 500 employees, within the European Union.

The EIF is a financial institution based in Luxembourg, established in 1994 as a joint venture between the European Investment Bank (EIB), the European Union (represented by the European Commission) and European banks and financial institutions. The EIB has recently become the majority shareholder and has confirmed the role of the EIF as the venture capital and SME guarantees arm of the EIB group.