Asset-based securities (ABS) is a financial tool for aggregating multiple small-scale loans, which would otherwise be too small to attract viable financing. This is suitable for green mortgages, electrical vehicle loans, energy efficiency upgrades, battery and storage projects etc.
Moderate - tried and tested
- Loans to small-scale projects can be aggregated and then securitised to reach an adequate deal size for bond markets.
- Capital raised through the sale of asset-backed securities by the loan originators can be used to create a new portfolio of loans.
- Tagging the securitisation as ‘green’ enables issuers to tap into the increasing demand for securities with environmental benefits.
- In high-interest environments, asset-backed securities issued in bond markets can offer a lower capital cost than bank financing. This is important for low carbon projects that typically have high capital expenditure.
GreenStreet Africa: aggregated solar energy financing in NigeriaView case study
Energy Efficient Mortgages Action Plan (EeMAP): green mortgages in the European Union to incentivise energy efficient homesView case study