BBVA Corporate & Investment Banking (CIB) has expanded its ESG-linked credit risk sharing transaction from €2 billion ($2.2 billion) to €6 billion ($6.5 billion), deepening its use of structured finance mechanisms to link capital to corporate sustainability performance.
The enlarged transaction brings Sweden’s occupational pension fund Alecta on board as a new investor alongside PGGM, the Dutch pension investor that participated in the original €2 billion deal. The move reflects rising institutional interest in tying financial returns to environmental, social and governance (ESG) outcomes.
“This enlarged ESG-linked synthetic securitisation is a significant milestone for BBVA, reinforcing our role in supporting the integration of sustainability into core capital markets activity,” said Pablo Fenoll, Head of Portfolio Management at BBVA CIB. “Welcoming Alecta alongside PGGM highlights the increasing alignment among institutional investors around the use of risk-sharing tools to incentivise ESG improvements.”
The revised portfolio includes loans to large corporates across Spain, the United States, and other European markets. Approximately 30% of the loan exposures are linked to ESG performance indicators. Under the terms of the agreement, borrowers’ interest rates can be adjusted based on their progress in areas such as reducing greenhouse gas emissions, improving water usage, or increasing gender diversity in leadership roles.
The transaction, which qualifies under the EU’s Simple, Transparent and Standardised (STS) framework, is expected to deliver 79% capital relief to BBVA, contributing to capital efficiency while retaining exposure to long-term credit risk.
PGGM, which manages investments on behalf of the Dutch healthcare pension fund PFZW, reiterated its commitment to financing structures that support climate and social goals.
“Collaborating with BBVA on an efficient upsize of this transaction, which now scales up to a €6 billion portfolio, in cooperation with our like-minded co-investment partner Alecta, is a strong step forward,” said Mascha Canio, Head of Credit & Insurance Linked Investments at PGGM. “We see clear value in incentivising corporate borrowers to improve their sustainable practices.”
Tony Persson, Head of Fixed Income and Currencies at Alecta, added: “This transaction aligns with our long-term investment horizon and sustainability goals. It is a structure that supports our commitment to responsible investment and will create value for our customers.”
BBVA stated that it intends to continue refining its approach to structured ESG finance as demand for integrated sustainability-linked financial solutions grows among corporates and investors alike.
