Issuing Bank

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What is the role of an Issuing Bank in a financial transaction?

An Issuing Bank plays a central role in complex financing transactions that involve the issuance of Debt Securities by aSpecial Purpose Vehicle (SPV) created specifically for the operation. This approach is widely used in:

  • Securitization transactions (Credit Portfolios, Receivables, Financial Assets);
  • Project finance (Renewable Energy Assets, Infrastructure, Industrial Facilities).

The Issuing Bank supports the transaction from inception to maturity:

1. Structuring the transaction

  • Creation of the SPV as an independent legal entity;
  • Selection of the Assets transferred to the SPV;
  • Design of the Financing Structure.

2. Placement of the securities

  • Definition of the target investor base;
  • Organization of the roadshow to present the transaction;
  • Collection of investor orders ;
  • Allocation of the securities issued by the SPV to investors.

3. Operational management over time

  • Management (often through a mandate) of the Cash Flows generated by the assets held in the SPV; 
  • Debt servicing of the SPV: payment of interest and repayment of bond tranches;
  • Compliance, transparency, and proper execution of the commitments made by the SPV.

What are the benefits for the client?

1. Risk Transfer: The underlying credit or project risk is transferred from the client to the investors.

2. Balance Sheet Optimization: Capital relief in the context of securitization for banks and reduction of balance sheet size for corporate sponsors in project finance.

3. Lower Cost of Financing: Access to diversified investors and tranching of risk often results in more competitive financing costs.

Examples of transactions where Societe Generale acted as Issuing Bank