The EIB Group (European Investment Bank and European Investment Fund) and the Instituto de Crédito Oficial (ICO) have invested in senior and mezzanine tranches of asset-backed securities (ABS) issued by BBVA to support working capital and liquidity needs, and address the investment constraints of Spanish small and medium-sized enterprises (SMEs) and mid-caps. Proceeds will be also channelled into green projects.
A large proportion of the final beneficiaries of this agreement for SMEs will be based in cohesion regions — where per capita gross domestic product is below the EU average and where it is particularly difficult to access financing. The operation will thus promote equitable growth and convergence between EU regions, which is one of the key aims of the EIB’s lending activities.
As part of the transaction, the European Investment Bank (EIB) makes an investment commitment of €430 million while €30 million are committed by the European Investment Fund (EIF). ICO’s participation in this ABS transaction translates into a total investment of €100 million. The total investments of this deal will enable the Spanish bank to direct up to €1.26 billion into the real economy.
The EIB Group’s total investment (€460 million) takes through a single securitisation with a structure designed to achieve optimal efficiency.
On one side, the notes purchase worth approximately €400 million targets SMEs and mid-caps to facilitate its access to finance and to promote and accelerate private sector investments. The transaction will address working capital and liquidity needs, and it will tackle investment constraints faced by these enterprises in the aftermath of the pandemic, the war in Ukraine, persistent inflationary pressures and increases in interest rates, among other issues.
On the other side, the current ABS securitisation transaction has a green component coming from the EIB Group’s €60 million investment. These funds will finance environment and climate action projects based on energy efficiency activities like the construction of nearly zero-emissions buildings carried out by real estate developers, or solar photovoltaic installations. The transaction supports the national and European targets for energy efficiency and renewable energy and contributes to the reduction of carbon emissions. This focus on energy efficiency is aligned with the EIB Group’s cross-cutting objective of climate change mitigation, and with REPowerEU, the EU plan to make Europe more energy independent.
“We are pleased to join forces with ICO and BBVA in this transaction in Spain covering priorities for the EIB Group, such as supporting the financial needs of SMEs, the backbone of the European economy. An initiative with added value as many of the beneficiaries are in cohesion regions, in line with the Group’s objective of promoting economic, social and territorial cohesion in the European Union,” stated EIB Vice-President Ricardo Mourinho Félix. “The EIB Group is also strengthening the energy transition, boosting energy efficiency investments on the Spanish market to meet EU policy objectives.”
ICO Chairman José Carlos García de Quevedo said: “This transaction is part of the ICO Group’s 2022-2027 strategy, whose action plans promote the growth of Spanish SMEs and the green and digital transition. We are pleased to join forces with the EIB Group and BBVA in this operation, which will channel finance to Spanish companies to support their projects and growth plans.”
“The EIF is delighted to be renewing our partnership with BBVA and ICO,” said EIF Chief Executive Marjut Falkstedt. “This transaction puts our securitisation tools to good use, generating fresh lending capacity in support of small Spanish businesses, strengthening their competitiveness and boosting growth and jobs. At the same time, the intention is to support small businesses in navigating the green transition, as a third of the new loan portfolio will be green loans, which is a key objective for the EIB Group and the European Union.”
Luisa Gómez Bravo, Head of BBVA Corporate & Investment Banking, added: “At BBVA CIB we strive to become relevant for our clients by helping them to achieve their business goals with wholesale solutions, and thus contribute to a more sustainable future. With the signing of this new line, together with the EIB Group and the ICO, we continue to support the Spanish business community and are betting on promoting sustainable financing, in this case, through energy transition projects.”
