Global law firm White & Case LLP advised on a transaction that has been named "Innovation of the Year" and received an honorable mention in the Impact Deal of the Year category at the inaugural SCI Capital Relief Trades Awards ceremony on October 17. The awards recognize excellence in, and bring mainstream attention to, the risk transfer industry.
In the winning deal, White & Case advised Societe Generale on the issuance by French securitization vehicle Fonds commun de Titrisation (FCT) of balance sheet notes linked to a landmark US$3.4 billion credit risk transfer related to the bank's diversified lending portfolio. The transaction incorporates an innovative factor to incentivize additional Positive Impact Finance lending, and is the first significant risk transfer transaction to use an FCT structure under French law since the end of the financial crisis. Mariner Investment Group (Mariner) has purchased a junior tranche of French law-governed notes through its IIFC platform. The portfolio corresponds to more than 250 loans in more than 40 countries around the world, with credits sourced from Societe Generale's leading structured finance franchise in a variety of sectors, including energy, infrastructure, shipping, aircraft, metals & mining, real estate, telecom and media & technology.
The transaction is one of the largest synthetic risk transfers for these asset classes and is also notable for an innovative capital allocation factor for Positive Impact Finance projects. Societe Generale has committed to dedicate 25 percent of the risk-weighted asset reduction to spur new Positive Impact Finance over the next three years. By reallocating the released capital from the legacy loan book and dedicating it to enhance the capacity to finance new Positive Impact Finance projects, the parties aim to provide strong support for the United Nations Sustainable Development Goals. Additionally, if Societe Generale is able to redeploy 50 percent of the risk-weighted assets towards the Positive Impact Finance capital allocation factor by the fourth anniversary of the transaction, Mariner has agreed to a reduction in the coupon, creating a positive pricing incentive for additional Positive Impact Finance investment.