FMO sells off sub-debt in secondary market debut

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FMO has sold $67.4 million of its sub-debt portfolio to three investment vehicles managed by Swiss-based asset manager responsAbility Investments AG. The sub-debt comprises transactions with nine financial institutions that predominantly serve SMEs in emerging markets.

Through a participation agreement signed in July 2016, the three investment vehicles obtain rights to cash flow in nine existing sub-debt deals with FMO. While FMO remains lender of record and continues to manage the portfolio, the three funds take over the underlying risks on 35% to 60% of FMO’s outstanding debt.

The deal is a reaction to regulatory changes under Basel III which make it more expensive to keep sub-debt deals on FMO’s own books – in short, FMO wanted to offset risk and create a precedent for a significant secondary transaction.

According to Ruhi Cosgun, manager of financial institutions at FMO: “This transaction demonstrates FMO’s capacity to source good deals that  can be syndicated out via a secondary sale to other institutions. In addition, it contributes significantly to our target of catalyzing investments from commercial parties in our focus markets.”

Related analytics

Transaction Name Stage Est. Value
Scorpio Tankers/$172 million/0117 Financing 172.00
Ambrosi/€13 million/0117 Financial close 13.89
Pivdennyi Bank/$25 million/1106 Financial close 25.00
Sviaz-Bank/$25 million/1206 Financial close 25.00
Arqiva/GBP 1.1 billion/1116 Financial close 1389.15
No data available
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