Montepio sells €360M credit portfolio

Banco Montepio and its partner company Montepio Crédito have sold around €360 million in consumer credit through a credit securitisation operation aimed at international institutional investors.

Such products are often bought by investors which seek to diversify credit risk by moving to an asset class that has not been distorted by QE capital flows.
According to the bank, around €356.8 million in consumer loans was sold in a portfolio that held around 40,000 contracts.
“The successful completion of this operation means that the bank has been able to deleverage an amount of risky assets by around €265 million”, states the bank in a communiqué sent to the market on Tuesday, adding that the bank can also beef up its capital ratios because of the offload.
The securitisation was sold to International investors in five collateralised tranches with an implicit average spread of Euribor 1 month 112 base points, with the demand for the securities being 1.8x the offer.
Securitisation most often occurs with loans (in this case consumer loans) and other assets that generate receivables such as different types of consumer or commercial debt. It can involve the pooling of contractual debts (into portfolios) such as auto loans and credit card debt obligations.