Deutsche Bank has announced that it has securitised an entire trade finance portfolio, which is proving attractive to institutional investors.

Letters of credit (L/C) are an asset in TRAFIN 2015-1, a US$3.5 billion synthetic collateralised loan obligation (CLO).

Institutional investors

The largest-ever securitisation of trade finance assets, TRAFIN is the third synthetic CLO launched by Deutsche Bank based on a structure that enables the bank to hedge a globally diverse short-term trade finance portfolio of corporate and financial institutions.

Deutsche Bank structured and arranged the offering and built a syndicate of institutional investors from Europe and the Americas to finance the portfolio.

Given the underlying portfolio's short-term nature, the portfolio will be regularly replenished.

Trade finance risk

The transaction's structure enables a broad range of assets to be included, including L/Cs, thereby giving Deutsche Bank's Global Transaction Banking division maximum flexibility in further developing de-risking activities.

The TRAFIN programme will play an important role in the bank's ongoing risk and balance sheet management efforts and it expects it to "further industrialise" its distribution and hedging of trade finance risk, the bank said in a statement.

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