Bucking the furtive approach of its rivals, ABN AMRO went public last week with a mortgage warehousing facility in Kazakhstan. The global bank recently closed a $200 million deal with client BTA Ipoteka, the originating unit of Bank TuranAlem. The ultimate idea is to package the collateral into an RMBS, an event that probably won't happen in the first half of the year.

"We're not expecting to refinance this until late 2008," said Tim Vieth, director of CEEMEA ABS at ABN. "Ultimately we believe the market will have appetite for this type of risk [but] we do need to see some stabilization in spreads."

The thorny repricing of risk around the globe has been especially painful for larger Kazakh banks, which as a group have relied on overseas debt to feed their steroidal growth. According to Moody's Investors Service, Kazakh banks' international borrowing is $40 billion, accounting for over half of their total nonequity funding. Sources have said that a boom in mortgage origination over the past few years was likely to have slowed down when the funding spigot was tightened in the summer, but fresh data isn't available yet.

Moody's issued negative ratings action on six Kazakh banks earlier this month. Among the unfortunates, TuranAlem saw its global local currency deposit ratings descend a notch to Baa3' from Ba1', and its foreign currency senior unsecured rating drop two notches to Ba1' from Baa2.'

Started seven years ago, Ipoteka presently has one-fifth of the mortgage business in Kazakhstan. The current deal is the second warehousing facility that ABN has set up for the bank. The first, closed in early 2006, went to term in March of this year, with the originator issuing a $141 million, three-tranche RMBS. The current facility has one breakthrough feature setting it apart from its predecessor: The underlying collateral can be either in dollars or tenge, the local currency. The local currency denomination of consumer assets in Kazakhstan has been gaining ground as the energy-propelled economy grows and access to credit expands.

The RMBS from earlier this year remains Kazakhstan's only public existing asset transaction. Efforts to get other transactions off the ground, such as Dresdner Kleinwort's plans for a consumer asset deal this year, have sputtered to a halt in the harsh market climate. Sources hope that issuance of existing assets from Kazakhstan and Russia will come back in the first half of the year. One market source said a single bold originator from Russia might place a deal before the end of the year, although the chances looked shaky.

Since markets turned last summer, global banks have been warehousing collateral from Russian originators as they put off term deals in anticipation of sunnier days ahead. But unlike ABN's activity in Kazakhstan, arrangers have been quiet about it. One reason might be the uncertainty around when an exit from the warehouse could actually happen.

"Warehousing increased dramatically after the summer," said Victor Kisselev, deputy head of debt and trade finance at Vneshtorgbank, a leading Russian originator. But the protracted nature of the liquidity crisis has also complicated warehousing. "Western banks became less enthusiastic to offer warehousing, especially to second-tier Russian banks. The competition for new mandates is now [among] those who can still provide warehousing and believe better times will come soon."

Kisselev said that for VTB, unsecured debt was a cheaper option than securitization during turbulent times.

(c) 2007 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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