Winner: Lion 4

The EIB Group and LBBW closed Lion 4 in September 2023, with the latter committing to channel €350m of freed-up capital into new financing for clean power projects. In recognition of its exceptional contribution to decarbonising the German economy and to boosting Europe’s energy independence, the transaction is SCI’s pick for ESG Transaction of the Year.

The synthetic securitisation involves a guarantee on a mezzanine tranche to support LBBW’s lending in the renewable energy sector. The €3.2bn reference portfolio consists of loans to SMEs and other corporates originated by LBBW in its ordinary business. The transaction is structured with a two-year replenishment period and falls under the STS securitisation framework.

Through a retrocession agreement, LBBW undertakes to convert the additional lending capacity into a new portfolio that is at least double the size of the €175m mezzanine tranche guaranteed by the EIB (or €350m). The amount allocated under this operation is expected to result in the development of about 340MW of new electricity generation capacity from renewable sources, equivalent to the energy use of more than one million homes.

Originating loans secured by wind farms and photovoltaic plants is typically very challenging. The beneficiary companies will be in Germany, other EU Member States and Switzerland.

The EIB Group supports the ‘use of proceeds’ approach to drive investments into a sustainable economy. With innovative tools like synthetic securitisation, capital can be released from a ‘brown’ loan portfolio and be reinvested into new ‘green’ lending.

The Lion 4 synthetic securitisation operation was undertaken in line with the EIB Group’s commitment to support the REPowerEU programme.

For the full list of winners and honourable mentions in this year’s SCI Capital Relief Trades Awards, click here.