Back in the big time
For the first time in four years, and without any prior warning, there was an expansion in securitisation volumes in Europe. BNP Paribas was at the forefront of the defining themes that characterised that growth in 2021 and is IFR's EMEA Structured Finance House of the Year.
While 2020 was largely characterised by a frantic scramble to help clients access finance for their businesses as the coronavirus pandemic swept in, 2021 was completely different. Whether measured by number of issuers, new or rare sectors, investor engagement or just plain overall volumes, the region saw a much-needed increase in securitised paper on offer.
"It's been certainly more dynamic … we pivoted into the expansion of markets, expansion of clients, and also at being more innovative," said Simon Jones, head of the securitised products group at BNP Paribas.
BNPP enjoyed an accelerated pace of change across ESG deals and technology lenders, it gained market share in the firing-on-all-cylinders CLO machine and introduced a range of debut issuers and rare asset classes. At the same time the bank was at the heart of the jump in flow issuance that sustained a dramatic increase in overall activity, with European supply hitting €91bn across all European currencies and asset classes, up by a third on the year before.
The bank dominated the market – taking a 13.7% share versus 10.6% in 2020 and some way ahead of the second place bank at 10.2%.
"While a lot of it is working with newer issuers, I think it's also heartening for us to see our bread and butter business, in terms of clients who we do a lot of businesses for historically, also trusting us to bring new collateral or new jurisdictions to the market," said Jones.
The breadth and depth of BNPP's primary markets business is illustrated by the fact it was a lead manager on 43 new issues across 10 European jurisdictions of which eight were debut originators. The deals include 11 auto ABS, eight prime RMBS, four non-standard prime RMBS, five buy-to-let RMBS, two non-conforming RMBS, five consumer ABS, three credit card ABS and two equipment lease ABS. The rest came from the CLO space – where the bank also took market share, including from the refinancing and reset wave.
"In CLOs it's been an absolute banner year in terms of trade flows. We have obviously, like others, had to take on the increased flow ... but at the same time we've been increasing market share," said Dushy Puvan, the bank's head of CLO origination and structuring.
Social works
In the RMBS space, BNPP was at the helm for the first ESG deal in UK RMBS, a £472m social transaction called Gemgarto 2021-1 – which securitised mortgages to complex borrowers that might not fit the automated approval model of a high street bank – and the first UK green RMBS. Both deals were for Kensington Mortgage. The latter, Finsbury Square 2021-1 Green, pushed boundaries not only on duration (4.5-year for the Class A tranche) and size – raising an impressive £750m with a fully exercised 24% prefunding element – but also with structural features such as a five-year revolving period.
"I think we have expanded the market frontiers on all fronts by bringing in a more diverse range of inaugural issues, more granular asset classes, and also some diversity in jurisdictions," said Sahil Khanna, head of EMEA ABS and transportation syndicate.
In addition to those landmark sterling transactions, the bank brought a debut trade from German fintech lender auxmoney which carried social labels on its Class A and B notes.
BNPP's head EMEA asset finance and securitisation syndicate Bilal Husain pointed to the bank’s willingness to deploy its balance sheet for a range of diverse clients, and its proactive response to the rising role of non-bank lenders and fintechs. The bank created 10 new funding facilities for such companies.
"They have become an increasingly important client segment for us. Our support allows these lenders to diversify their funding sources and fuel their continued growth," said Husain.
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