(11th November 2003 – Australia) Commonwealth Bank has launched its first ever A$2.5 billion synthetic loan securitisation for small to medium sized enterprises.The initiative consists of issuing $177.5 million credit linked notes to institutional investors through the Medallion Trust securitisation program.
CBA group executive, Institutional & Business Services, Michael Ullmer, said the bank was optimising value through better utilisation of economic capital while actively managing credit concentrations in its portfolio.
Credit Ratings company Standard & Poor’s said CBA’s consistent business practice, high standards and risk management philosophy would have a major influence on the performance of the portfolio.
S&P credit analyst Vera Ha said the market for SME loan securitisations had grown over the past three years, particularly in Europe.
“The synthetic structure means that the trust does not need to deal with issues regarding the transfer of assets or with managing varied terms and conditions and optionality under the loan agreements,” she said.