Green securitization in Europe has struggled to get off the ground in recent years, but in the past month, four private deals and warehouses have been launched, and the first ever public solar power ABS in Europe. There's never a bad time for securitization to do good for society, but these deals are well timed to edify the doubting Thomases within the European Union.
Last week, Norwegian bank DNB completed a green significant risk transfer (SRT) securitization focused on zero emissions vehicles; Estonian fintech Inbank completed a Polish solar SRT; and Spain's BBVA announced an innovative ESG-linked trade with PGGM, the Dutch pension fund investor that is an SRT powerhouse.
In addition, HomeServe, the UK home improvement firm, secured a £250m warehouse facility with Barclays.
With the European Commission's consultation on the European Securitization Regulation (EUSR) ending in just seven days, these announcements have come not a moment too soon.
Indeed, their appearance now may not be accidental.
Several EU-funded investment bodies like the European Investment Bank, European Investment Fund and the Commission's InvestEU were part of the Inbank deal. The EIB was the investor in DNB's green SRT, while Enpal's solar ABS had an EIF guarantee on the senior tranche.
Aside from being good investments, these transactions (or at least their publicity) appear to have an auxiliary purpose — to prove securitization worthy of supportive reform.
In the coming months, European legislators will decide how best to revitalise the market. Many of them will know little of the sector beyond The Big Short and the tall tales they have heard of how securitization ruined the world in 2008. They will need a lot of educating and convincing that this is the market to help kickstart growth and competitiveness in the EU.
By showing off securitization's green credentials in these transactions, the EU's investment arms are signalling its broader usefulness for the EU's Green Deal, a project which aims to make Europe climate-neutral by 2050.
At a predicted cost of an extra €620bn a year for the next decade, it needs all the funding it can get.
In addition, numerous sources have told GlobalCapital how important it is for securitization to broaden its horizons to be of use to all member states, not just the traditional financial powerhouses like Germany and France.
Norway is only in the European Economic Area, not the EU, but DNB's deal can be a beacon to the rest of Scandinavia, where public securitizations recently can be counted on the fingers of one hand.
Perhaps most important of all is Inbank's deal. An Estonian bank helping to make Poland greener shows the whole of central and eastern Europe what securitization can do.
Over the coming months, many sceptical politicians will be poking around at the asset-backed finance industry. These innovative and unusual green deals will help dispel the doubts.