Securitization is a form of debt financing that relies on the pooling of illiquid assets (e.g. loans or leases) to mitigate some of the underlying risks. Securitization enhances companies’ access to capital markets funding on potentially better financial terms than those of more typical commercial lending.
BDC Mandate
2009 Federal Budget - $12 billion announced for the Canadian Secured Credit Facility (CSCF) to purchase term asset-backed securities backed by loans and leases on vehicles and equipment. The program ended March 31, 2010.
2010 Federal Budget - initial $500 million announced for the Vehicle and Equipment Financing Partnership (VEFP) as a part of the BCAP program to expand financing for small and medium-sized finance and leasing companies. Under VEFP, the Business Development Bank of Canada has formed a public-private partnership with TAO Asset Management Inc. (TAO) and currently offers financing through the Multi-Seller Platform for Small Originators (MSPSO), a match-funded, medium term asset-backed securities issuer. |
Vehicle and Equipment Financing Partnership (VEFP)
Under the Vehicle and Equipment Financing Partnership, BDC launched a public-private partnership with TAO Asset Management Inc. (TAO) in April 2010. The partnership provides a financing option through a common securitization platform, the Multi-Seller Platform for Small Originators (MSPSO), which is an economical and efficient way to access the securitization markets for small and medium-sized finance and leasing companies that may not have the structuring and administration expertise or transaction volume to cost-effectively establish their own program. The VEFP program is geared towards the purchase term asset-backed securities backed by loans and leases on vehicle and equipment.
Highlights of MSPSO
- Revolving, committed funding facilities can be provided to companies that qualify for financing
- Financing facilities will involve a common structure to facilitate the timing, cost effectiveness and ease of completion of transactions
- Funding will be provided on a match funded basis, e.g. contracts to be funded for their entire term
- Transactions will not be formally rated, although transactions will be structured using published rating agency methodologies
- Financing will be provided on commercial terms
- There is no minimum transaction size, although facilities below $15M may not be cost efficient for the issuer.
Securitization Investment Opportunities
Third Party Investors are welcome to participate with BDC to purchase offered securities.
Contact us
Companies interested in accessing MSPSO funding through the BDC-TAO Partnership should contact: James Joyce at 416-309-9320. For more details on this program, visit our partner's website at: http://www.taoasset.ca