Institutional investors predict growth of sme asset backed securitisations

  • 69% of institutional investors predict increased issuance of SME ABS.
  • Finance, trade finance, leasing and bridging finance most popular SME cash flow assets to securitise.
  • Amicus completed a £100m short-term mortgage-backed securitisation this week.

As traditional bank lending to small and medium sized enterprises continues to remain constrained, a new study reveals that seven in ten (69%) European institutional investors believe there will be an increase in the issuance of SME finance-related asset backed securitisations (ABS) over the next two years.

The research was commissioned by Amicus Finance plc (“Amicus”), a leading specialist in short term lending solutions which this week completed a £100m short-term mortgage-backed securitisation. The study showed that three-quarters (73%) of institutions believe there will be growing appetite for investing in securitisations providing access to SMEs’ underlying cash flow assets.

Investor types most attracted to SME securitisations are likely to be insurance companies, private sector pension funds followed by private equity investors and hedge funds, according to the study.

When asked to identify which cash flow assets will be most in demand among institutions, 53% of investors selected traditional property finance, closely followed by trade finance (52%), leasing (44%) and property bridging finance (44%).

Given the continued high demand for property bridging finance spurred on by the buy-to-let market, 60% of investors anticipate growth in demand for short term syndication of this debt through bond issuance.

Investors are clearly bullish about the prospects of the SME securitisation market and this is welcome news to specialist lenders such as Amicus which this week completed a £100m short-term mortgage-backed securitisation to broaden our funding sources.Many long term investors see the attractions of accessing the rapidly growing non-bank SME lending sector and with greater standardisation and transparency we are likely to see greater numbers of securitisations coming to the market.

John Jenkins
CEO of Amicus

Amicus’ first UK MBS (mortgage-backed security), Amicus Mortgage Finance 2015-1 is a regulated non-rated entity with a scheduled maturity of July 2018, comprising a portfolio of quality short term loans with a weighted average loan to value of 60%; the term of the loans ranges from 6-18 months.

Amicus offers short term, property-based lending solutions to private and corporate borrowers, which include landlords, developers and owner-occupiers.