IFC Introduces Synthetic SRT Transaction To Elevate Climate Finance In Poland
(MENAFN- Trend News Agency) BAKU, Azerbaijan, April 9. The InternationalFinance Corporation (IFC) and BNP Paribas bank Polska (BNPPPoland), a subsidiary of BNP Paribas S.A. Group (BNPP Group), haveannounced today the launch of a Synthetic Significant Risk Transfer(Synthetic SRT) transaction aimed at bolstering sustainable financefor renewable energy, water efficiency, and clean transportationprojects in Poland, Trend reports via IFC.
Synthetic SRTs are innovative financial instruments increasinglygaining traction in emerging markets. They play a vital role inbolstering the resilience of financial markets by unlocking bankcapital and easing access-to-finance constraints.
In this transaction, IFC will assume mezzanine exposure to a$548 million-equivalent credit portfolio from BNPP Poland's balancesheet. This marks BNPP Poland's inaugural SRT transaction and thesecond collaboration between IFC and BNPP Group, following thefirst involving BNPP Group's global emerging markets trade financeoperations. IFC's investment will facilitate BNPP Poland inoriginating new PLN-denominated sustainable finance loans withinPoland. This initiative marks IFC's debut SRT with the "Simple,Transparent, and Standardized" designation, aiming to enhancescalability for issuers, investors, and regulators.
Despite advancements in renewable energy, Poland remains one ofEurope's most carbon-intensive nations, with fossil fuelsconstituting nearly 80 percent of its energy supply in 2023. Polishbanks encounter constraints in financing the energy transition,estimated to require $350 billion between 2021 and 2040. In thiscontext, SRT transactions enable banks to mitigate risk weights ontheir asset exposures, thereby liberating essential capital tobroaden the reach of climate finance.
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