Credit Suisse is launching its first synthetic small-to-medium enterprise securitization, to be issued from its newly-created Clock Finance vehicle. The size of the first issue is expected to be around CHF674.4 million (USD539.9 million), and notes are set to be denominated in Swiss francs and euros. The deal is backed by 1,977 reference obligations linked to SMEs and corporates located in Switzerland, and were originated by Credit Suisse itself. The size of the portfolio is CHF4.8 billion (USD3.84 billion). The deal is set to close toward the end of the week. Officials at Credit Suisse in London declined comment.
The deal has a synthetic structure, in which the credit-default swap references the portfolio under which it is determined when a settlement amount is payable to Credit Suisse. The proceeds of the note issuance are placed into a cash account.
One syndicate official at a bank in London suggested more SME CLOs are coming to market given the favourable capital relief treatment this asset enjoys under new Basel II regulations. Nicolaus Trautwein, head of European debt capital markets and securitization for Germany at Eurohypo in Frankfurt, added interest from both the SMEs and the banks in doing such deals has grown recently. "I do think that it could go forward, but it is tough work to put together a deal to be the right size," he added.
