Winner: Marco Polo Three

Crédit Agricole and the IFC’s Marco Polo Three transaction has won the Impact Deal of the Year category in SCI’s Capital Relief Trades Awards. The significant risk transfer trade stands out for its sustainable finance aspects and size, as well as its impact on securitisation as a tool to help banks in developing countries cope with the effects of the coronavirus pandemic.

Twice as large as the last Marco Polo deal from March 2018, the third issuance from the programme features a retained first loss tranche, pro-rata amortisation, a time call and a replenishment period that is equal to two years. The five-year deal provides a US$182m mezzanine guarantee on a US$4bn-equivalent reference portfolio comprising over 1,300 emerging market trade finance exposures. Pricing in April 2021, as the second Marco Polo trade was approaching full amortisation, the transaction came at a time when emerging market trade finance flows had been hit hard by the Covid-19 fallout.

“It is our largest synthetic securitisation to date and our third with IFC, demonstrating their confidence in CACIB’s origination and risk discipline,” notes Thierry Colin, md, private debt solutions at Crédit Agricole Corporate and Investment Bank.

The transaction further innovates through its sustainability agenda and product, which includes a sustainability-linked financial guarantee. Crédit Agricole will redeploy the freed-up regulatory capital in US$600m over four years of new lending in several social and sustainability-linked sectors in emerging markets countries, including health, agriculture, telecommunications and local industries loans.

Furthermore and unlike previous transactions from the programme, Marco Polo Three matches the IFC’s sustainability finance criteria with that of Crédit Agricole’s. According to Jean-Marc Pinaud, head of structuring at Crédit Agricole Corporate and Investment Bank, this novel aspect is particularly relevant.

“We had in-depth discussions and reflections with the IFC regarding sustainability and ESG aspects. The fact that we can rely on our internal guidance and criteria on a transaction of this nature is a strong recognition. It expands our partnership with the IFC and I think it also highlights our discipline as an originator.”

Honourable mention: GARC Energy Renewables-1

Intesa Sanpaolo’s GARC Energy Renewables-1, which references a €1.3bn portfolio of green assets, is the first synthetic securitisation of its kind in Italy and broadens the bank’s scope to renewable energy. The two-tranche synthetic securitisation transfers the long-term risk of a portfolio of 42 project finance loans for the construction of wind, (representing 50% of the pool), photovoltaic (40%) and biomass (10%) power plants.

The junior tranche of the trade was hedged via a pledge over cash collateral deposited with the originator. Investors will receive a fixed rate coupon paid on a quarterly basis.

The clean energy generated by the green plants included in the securitised portfolio is expected to equal about 7.2 GW, representing enough capacity to meet the annual needs of six million households and to reduce CO2 emissions by an amount equivalent to that produced by three million cars.