Nordea Bank Abp entered into a synthetic risk-sharing transaction related to €5.1 billion portfolio of corporate as well as small and medium-sized enterprise loans.
Investors will purchase credit-linked notes referencing the first loss tranche of the portfolio, which comprises over 2,000 borrowers.
Synthetic risk-sharing instruments are used to keep the assets on the company's books while sharing the credit risk with the investors, Nordea said. The transaction will free up capital for the bank to redeploy in its core business.
Nordea has not revealed the coupon rate for the securitization, which is expected to close in January 2020.
J.P. Morgan and Nordea are acting as joint arrangers for the transaction.