PGGM has entered into a risk-sharing transaction with Banco Santander with the aim of further diversifying the asset mix of its pension fund client, PFZW, in an efficient manner.

The private transaction, which relates to a €2.3 billion portfolio of Small and Medium Enterprise (SME) loans originated by Banco Santander in Spain, offers access to a portfolio of credit risk which, said PGGM, should enable it to achieve “a stable and robust long-term return” on behalf of its client.

The so called ‘synthetic securitisation’ deal highlights the growing appeal of exotic financial instruments in an ultra-low interest environment and is not a new move for the Dutch pension manager. PGGM has substantial experience of risk-sharing transactions of this nature, with the amount invested in risk-sharing transactions to date exceeding €5 billion, relating to loan portfolios of over €80 billion across the world. This is the first time, however, that PGGM has closed a risk-sharing transaction in Spain.

Mascha Canio, head of Credit & Insurance Linked Investments at PGGM, said: “This collaboration shows how a Dutch pension fund can work together with banks to stimulate small and medium business investments in the European economy.”

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