Signet Bank, in cooperation with Primero, has successfully launched the first securitisation transaction in Latvia

Signet Bank, in cooperation with the car leasing company Primero, has launched the first securitisation issue in Latvia – the Bank helped its subsidiary to issue asset-backed securities in the amount of EUR 9.46 million.

The issue of securities consists of two tranches – Senior tranche and Junior tranche and is secured by lease and leaseback portfolio that consists of secured car loans. The maturity of the securities is 7 years, however, the weighted average maturity is considerably shorter, since the entire cash flow from the underlying loan portfolio is passed through to the investors and directed to gradual redemption of securities.

The securities issue is aimed at attracting additional financing to support Primero’s growth plans.

Primero is a subsidiary of Signet Bank, and its second shareholder is an international fintech group – Eleving Group. It started its operations in 2019 and is one of the fastest growing leasing companies in Latvia. Primero provides financing of new and used cars for both individuals and legal entities for up to 7 years and up to EUR 25,000. The company cooperates with more than 200 car dealers throughout Latvia and currently serves more than 6 thousand customers.

The project provided our team with an opportunity to gain new experience and broaden our expertise, while expanding the range of financial instruments and financing opportunities available to local issuers. Asset-backed securities are quite common source of financing in other countries, especially in the USA, but so far have not been carried out in Latvia, mainly due to complexity, as well not fully developed regulatory base. We hope that our experience will also encourage other issuers to use this instrument, as a developed securitisation market improves access to financing and reduces financing costs for local companies.

Kristiāna Janvare, Head of Investment Division at Signet Bank

We always strive for development, but it requires capital. At the moment, the availability of capital in the financial markets has decreased, so I am sincerely pleased with the solution proposed by Signet Bank. Although this is the first securitisation transaction in Latvia, Signet Bank organised it professionally and clearly, and raised no doubts at any time about the successful completion of the transaction. The raised funds will be used for issuance of new loans to both individuals and legal entities, as well as to refinance the company’s existing liabilities. At the moment, we see a growing interest specifically in the segment of legal entities, where we also plan to expand our offering to customers.

Krišjānis Znotiņš, Chairman of the Board of Primero Finance