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Background:

Credit Infrastructure reforms in the area of secured transactions and asset-based lending (ST/ABL) enable lenders to manage risk by leveraging more types of collateral, thereby providing finance to a wider range of borrowers. The lenders using secured transactions infrastructure such as modern secured transactions (ST) frameworks and movable asset-based registries have been mostly banks, in keeping with the general makeup of credit providers in the markets in which IFC has worked. As digital finance becomes more widespread, an increasing range of loan originators, including NBFIs, fintech lenders, and embedded finance providers, could leverage the ST/ABL infrastructure to provide loans secured against invoices, inventory, and other movable assets, as well as other credit products such as factoring of receivables and equipment leases. These types of lenders in general are non-deposit-taking, and often do not have the balance sheet strength to directly raise debt funding. Structured finance transactions at the wholesale level could help investors manage their risks in funding such lenders, enabling increased investment flows into the ABL market.

Modern legal and regulatory foundations of credit infrastructure enable a range of financing structures that can be used to mitigate risks so as to be able to attract a broader range of funding. Financing structures that are secured by underlying ABL can also be used to mobilize funding at the wholesale level; this is particularly useful for non-deposit-taking credit providers to finance their activities through private credit markets and/or securitization. A commonly used approach for structuring finance of ABL loan portfolios is the use of off-balance sheet Special Purpose Vehicles (SPVs), which separate assets of the funding entity from the originator and create additional structural credit enhancements to improve the credit rating of the entity.

Under the Global Financial Infrastructure Program, with support from SECO, IFC has developed an assessment tool measuring the viability of the legal, regulatory, and market infrastructure for structured finance transactions. The project also ascertained the feasibility of structured finance solutions, including off-balance sheet SPVs, in Colombia and Ghana, by applying the assessment tool.

Why attend:

• Understand the current landscape, key private law, including secured transactions law and lessons from Colombia’s and Ghana’s securitization success
• Learn about the findings from the study and practical steps for regulators, investors and market participants can build a more diversified and resilient structured finance ecosystem
• Understand the assessment tool for structured finance, how it works, and practical opportunities to scale MSME securitizations in other markets, especially the reforms needed to unlock them
• Learn about how structures and multi-originator pooling can make MSME securitizations viable and how development institutions can provide targeted support—technical, financial, and risk mitigation—to develop MSME securitization markets.