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
Masdar & EDF Energie Nouvelles/$650 million/0317 Pre-financing 650.00
Isbank/€100 million/0317 Financial close 108.00
Farstad Shipping/NOK300 million/0317 Financial close 35.00
Government of Turkey/€255 million/0317 Pre-financing 269.70
Vakifbank/$250 million/0317 Financial close 250.00
No data available
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