- 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 comfortable with a security that was less liquid than the assets typically considered for securities-backed lending.
Securities-backed lending can be available against a range of financial assets, although the number of lenders willing to accept an asset can depend heavily on its liquidity, trading volume and underlying characteristics. Illiquid assets can therefore present a more challenging lending proposition, particularly where there is limited market activity.
In this case, Enness identified a lender with the appetite 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 particularly 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 with the appetite and experience to consider this type of collateral.
The resulting facility provided the client with significant 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.
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.
Disclaimer:
Enness does not give advice on Securities-Backed Lending or investments and lender introductions are unregulated. This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Securities-backed finance is subject to lender criteria, collateral eligibility and market conditions. The value of financial assets can fall as well as rise, and borrowers may be required to provide additional collateral or repay borrowing if the value of the underlying security falls. Terms and availability will vary depending on the individual circumstances and the proposed collateral.
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.
