NIBC’s North Westerly VI CLO has been awarded “Structured Finance and Securitisation Deal of the Year” by the International Financial Law Review

Recognition for NIBC’s inventiveness for reimagining the CLO product

On 29 April 2021 IFLR announced the winners of the 2021 IFLR Europe Awards. The North Westerly VI collateralised loan obligation transaction (CLO) is awarded “Structured Finance and Securitisation Deal of the Year 2020”. This CLO was the first to consider ESG factors across all its investments and is therefore the first-ever CLO compliant with best practices of ESG-focused investing.

Comment published by IFLR:
The deal is structured so that each asset’s ESG profile is diligenced before its acquisition and is then diligenced continuously throughout its life, so that there is continuous monitoring and re-assessment of the portfolio to grade obligors and industries based on the level of ESG risk. These are features never previously built into a public CLO. Each asset’s ESG status is scored by the collateral manager, with ongoing monitoring, with a view toward maintaining a weighted-average, portfolio-wide ESG score. The deal had to reimagine the CLO product and develop asset and portfolio-level criteria alongside a bespoke reporting mechanism, and revise definitions of what an ESG loan is, what should the KPIs be and what the manager’s policies are. At the same time, EU legislation on ESG was coming into play with its taxonomy regulation.

Herman Guelovani, Head of Credit Management at NIBC Bank:
“We are very pleased to be awarded as a Collateral Manager for this inventive and groundbreaking CLO. At NIBC, we are taking a sustainable approach in the way we do business. In order to do this, we constantly look for new and inventive ways to extend NIBC’s ESG lending principles across the spectrum of our products and activities. This CLO is a good example; the ESG scoring system and reporting KPIs were developed within NIBC. We took the fundamental concept of quantifying every single aspect of CLO performance in the form of tests and applied it to ESG assessment. The idea was to take a step further from pure exclusion criteria to positive screening utilising borrower ESG toolkit scoring and overall portfolio scoring in order to provide CLO investors with greater transparency regarding ESG profile of the underlying loan portfolio.”