Alpha Bank is to raise about $510 million (410 million euros) from a deal backed by shipping loans, one of the first of its kind in Europe for nearly a year, finance industry and Alpha sources said on Friday.
The fundraising, arranged and financed by Citigroup, bundles together approximately 35 individual shipping loans with an average life of two-and-a-half years with a five-year final maturity, industry sources said.
The deal represents efforts by industry players to seek ways to raise money and plug a multi-billion dollar funding gap, caused by several European banks pulling out of the shipping sector or scaling back exposure in response to tougher regulations after the financial crisis.
“Securitization transactions are part of Alpha’s program. They are a tool to differentiate the bank’s funding sources,” one Alpha Bank source said.
Sources told Reuters in June that Alpha Bank, Greece’s fourth-largest lender, planned to securitize about 1 billion euros of shipping loans and expected to raise about 500 million euros in the transaction.
Industry sources said the private deal was a secured financing with the loans to be placed in a special purpose vehicle.
Alpha Bank will act as the servicer of the loans, which include financings provided for dry bulk and oil tanker ships.
The size of the underlying portfolio was $850 million, they said.
“What it does is it frees up Alpha Bank’s books to enable them to start providing new finances,” one finance industry source said.