Crédit Agricole CIB offloads risk in portfolio via green capital note

Written By: Stratton Report
March 6, 2017

On March 6, Crédit Agricole CIB is pleased to announce the completion of Premium Green 2017-2, a $3 billion synthetic risk transfer related to the bank’s portfolio of project finance and object finance loans.

According to the bank, this transaction is a first-of-its-kind green capital note, which it claims blending best practices from capital management with socially responsible investing.

According to Crédit Agricole, tye Mariner Investment Group, through its IIFC platform, has purchased notes corresponding to the $3 billion Structured Finance portfolio through two of its managed funds, bringing Mariner’s overall transaction volume to more than $8.2 billion in synthetic securitization risk transfer.

The bank stressed that the Premium Green 2017-2 reference portfolio consists of approximately 200 obligors, who are distributed across power, oil and gas, real estate, infrastructure, aviation, shipping, and rail lending sectors.

Stressing the socially responsible features of the investment, Crédit Agricole CIB stated it has committed to redeploy the freed-up regulatory capital in $2 billion of new lending in several green sectors, including renewable energy, energy efficiency loans for commercial real estate renovation, public transportation, and sustainable waste and water treatment facilities.

Crédit Agricole CIB emphasized that it will regularly report on the composition of the new green loan portfolio, and will periodically communicate on certain of the projects that have been financed as a result of this risk-transfer operation.

The bank noted that the “green-ness” of its Green Portfolio is defined according to the same Green Bond Framework, and has been independently reviewed by Sustainalytics

Andrew Hohns, Lead Portfolio Manager for the IIFC strategy remarked:

On behalf of Mariner, we are so pleased to collaborate with Crédit Agricole CIB on this landmark transaction. The bank is universally recognized as a top-tier infrastructure lender and it is a great pleasure to see leading project finance banks increasingly adopt synthetic securitization in their approach to balance sheet management.

Frédéric Méron, Chief Financial Officer of Crédit Agricole CIB observed: “Notwithstanding the uncertainty around expected regulatory changes, Premium Green 2017-2 ensures that Crédit Agricole CIB will remain fully capable to develop and expand its banking and lending services for the real economy, financing critical social infrastructure, energy, and public transportation.”

Molly Whitehouse, one of Mariner’s leads on the deal structuring team commented: “We very much hope that the news of this transaction will be the first in a wave of issuances of Green Capital Notes. Capital markets can contribute so much to the mitigation of climate change risk and the necessary renewal of public infrastructure. This transaction demonstrates that synthetic securitization is not just an important tool for balance sheet management, but also can generate real social and environmental returns.”

Jean-Yves Hocher, CEO of Crédit Agricole CIB stated: “The fact that the transaction incorporates innovative features from the socially responsible world makes it even more valuable to us. We have placed a strong corporate emphasis on being a market leader in sustainable banking and socially responsible investment. Premium Green 2017-2 is on the cutting edge, with an optimized portfolio and the commitment to reinvest capital into pro-environmental lending.”