- Client: European client
- Loan Amount: €30 million
- LTV: 47.5%
- Rate: 6.325%
- Security: Corporate bond
Enness was approached by a European client looking to raise additional corporate liquidity against a single illiquid corporate bond. The client wanted to unlock capital from the asset without selling the bond, requiring a lender able to consider a security that was less liquid than the assets typically used in securities-backed lending.
Securities-backed lending can be available against a range of financial assets, although the number of lenders able to consider a particular asset can depend on factors including its liquidity, trading volume and underlying characteristics. Illiquid assets can therefore present a more complex lending proposition, particularly where there is limited market activity.
In this case, Enness identified a lender able to consider the corporate bond as security and structured a non-recourse facility of €30 million at 47.5% LTV. The facility had a rate of 6.325% and a tenor aligned with the maturity of the underlying bond.
The non-recourse structure was relevant to the client. Under the agreed structure, the lender’s recourse was limited to the pledged collateral, subject to the terms of the facility. This provided the client with a defined financing structure while allowing them to retain their position in the underlying asset.
Arranging finance against an illiquid security requires careful lender selection. Rather than approaching the market indiscriminately, Enness assessed the characteristics of the asset and focused on lenders able to consider this type of collateral.
The resulting facility provided the client with corporate liquidity while retaining exposure to the corporate bond. The case demonstrates that securities-backed lending is not necessarily limited to highly liquid, mainstream financial assets, although the terms and availability of financing will depend heavily on the underlying security and lender criteria.
For clients holding concentrated or less liquid financial assets, the structure of the facility can be just as important as the headline borrowing amount. Enness can assess the characteristics of the proposed collateral and identify lenders that may be able to consider more complex securities-backed lending requirements. If you are looking to raise liquidity against a financial asset, speak to a Securities-Backed Lending Specialist to discuss your circumstances.
Securities-Backed Lending Disclaimer: Enness does not provide advice on Securities-Backed Lending or investments. Lender introductions are unregulated. Terms and availability are subject to the individual circumstances, underlying securities and lender criteria.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
