Nov 2, 2017 - This second Alpha Bank transaction has certainly been well received. Sources say it priced with a yield be
2 November 2017
TF Briefing Short version
Secure enough to securitise? In early October, Greece’s Alpha Bank closed its second shipping loan securitisation. The deal follows a successful debut issuance in 2014, whose strong performance encouraged Alpha Bank to try again. But is this sign of improvement in the shipping loan market, or is it the exception that proves the rule? This second Alpha Bank transaction has certainly been well received. Sources say it priced with a yield below 3.0% - which is in line with the yield of a covered bond sold by Greece’s Eurobank soon after. This, for a portfolio of shipping loans during a sustained crisis in the sector, is an achievement. However, the deal also demonstrates the limitations of this troubled segment of transport finance. Trade Finance understands that the deal was issued privately (with Citi as the arranging bank, just like the 2014 deal). This has its benefits, of course, but the truth is that it would make no sense for it to have been launched in the public markets – because the potential investor base is simply too small. Despite the success of the initial issuance, and the likely success of this one, if ship owners want to reach a larger range of investors they will be disappointed. Part of the problem is that, unlike other asset classes, shipping still requires better international standards to make securitisations easier. The sector is still some way off from the aircraft space, for example, where public securitisations occur very frequently. This is partly because aviation investors benefit from a set of rules laid out in the Cape Town Convention – a 2001 agreement that set uniform, international standards for repossession rights. As a result, aircraft securitisation investors gain added comfort from the knowledge that their access to the collateral is hard to dispute in the event of a default. There is no reason for financiers to get too optimistic about the shipping loan market just yet. Read more See Trade Finance's Q3 2017 League Tables recently published here
Graphs 1 & 2 Source: Trade Finance Analytics
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