One Small Step for Securitization

Abstract

1. Adele Archer 1. A director in public finance at Standard & Poor's in London. (adele_archer{at}standardandpoors.com) 2. Lapo Guadagnuolo 1. Associate director in structured finance at Standard & Poor's in London. (lapo_guadagnuolo{at}standardandpoors.com) One of the most exciting developments for Europe's public private partnership (PPP) financing of infrastructure in 2004 was remarkable for the fact it had no direct public-sector involvement at all. On November 12 Depfa Bank, a Dublin-based institution that plays an active role in lending to public authorities as well as PPPs across Europe, completed a £391.7 million (€560 million) securitization of its U.K. Private Finance Initiative (PFI) senior loans. The bank entered into the transaction to transfer risk to KfW Föderbank (the German state-supported lender rated “AAA” by Standard & Poor's), a move that will free up capital to further its lending activities in the public infrastructure market. Depfa's securitization of its U.K. PFI assets is the first of its class and will be regarded as a pathfinder for future transactions. Indeed, one of Depfa's objectives was to create a model for future deals.