Trade receivable deals are on the rise, according to securitization bankers who argue that liquidity pressures on corporates are putting the deals on the agenda of European cfos. In addition, trade receivable deals can offer cheaper financing for sub-investment grade small- and medium-enterprises and multinationals, says Tim Nicolle, ceo of JMN Demica. The European market has seen one deal this year--from Vitol, an oil trading company,--and there is another pending from GALP Energia, Portugual's state-owned oil company.
"Seventy percent of the European market this year has been RMBS," says Richard Hopkin, managing director in securitization at Société Générale. He argues that European asset-backed investors will be very receptive to a well-structured trade receivables deal. Under the new Basel II regulations, conduit deals could become more expensive, says Hopkin. However, Peter Rek, head of asset securitization at Siemens Financial Services, notes trade receivable deals done through conduits will likely remain popular with lower-rated corporates looking for cash despite the expense.