Trade receivables securitization transactions are bucking the trend of the wider securitization market as corporates seek more affordable access to long-term financing.
Data from the Association for Financial Markets in Europe (AFME) shows that European securitized product issuance in the third quarter of last year was down more than 58% from the previous quarter.
There was also a notable fall in the percentage of credit ratings agency actions that resulted in an upgrade from 91% in the second quarter of 2023 to 78% in the following quarter.
This slump can clearly be linked to the rise in underlying base rates. “However, there are a lot of private securitizations,” explains Gert Sonck, global head of receivables finance at ING. “Trade receivables transactions are typically very stable… and tend to be interest-rate agnostic.”
Privately funded
Mark Stephens, chief executive and founder of Blackstar Capital Group, says that if there are large buyer concentrations, pool-wide limits can be set by rating or other criteria, seller risk can be assessed based on historical pool performance, and the rating agencies have issued rating methodologies that the market can use as guidelines.
