PGGM and Alecta have signed a credit risk sharing deal with BNP Paribas on a €8bn portfolio of European, US and Asia-Pacific corporate loans.
The transaction follows a similar but far smaller deal with BBVA on project financing concluded last month.
The new transaction is the tenth co-investment in credit risk sharing by the Dutch and Swedish pension asset managers since they started a collaboration on this in May 2020.
Under the deal, Alecta takes a 30% share in all new credit risk sharing transactions initiated by PGGM.
The deal is the first to be based on the EU’s new set of criteria for Simple, Transparent and Standardised transactions (STS). PGGM hailed this as “an important milestone”.
The EU’s STS standards, that are not yet mandatory, relate to the minimum amount of ‘skin in the game’ that loan originators are required to keep.
The EU sets this at 5%, but for PGGM this is 20%. Besides, banks are required to offer homogeneous loan portfolios in order to avoid situations such as those preceding the 2008 financial crash when toxic securitised loan packages caused the financial system to collapse.
A mix of project financing and corporate loans would, for example, not meet the new standards.
Angélique Pieterse, senior director at PGGM, said: “Realising our first STS qualifying risk sharing transaction with BNP Paribas feels extra special, considering the two institutions started the very first dialogue on STS for synthetic securitisation with the EBA together back in 2015. Now, the circle is closed by entering into this transaction, and we hope there will be many more to follow.”
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