A new kid has moved into the neighborhood of diversified payment rights (DPRs). Kazkah-stan's ATF Bank collateralized that asset in a five-year $100 million loan-note structured, and fully underwritten, by WestLB, according to sources familiar with the deal. Moody's Investors Service rated the transaction Baa3'.

WestLB declined to comment until it had issued a press release, which hadn't taken place by press time.

As a second-tier Kazakh bank, ATF's push into the terrain of securitization, even through a private deal, is significant, according to a source away from the deal. Until now, only two other Kazakh banks, Kazkommerstbank (KKB) and Halyk Savings Bank of Kazakhstan, have securitized their DPR flows and both belong to the country's trio of alpha banks. KKB issued a public $300 million, seven-year deal last December, with a $200 million senior tranche jointly led by WestLB and JPMorgan Securities and the remaining $100 sole led by WestLB. Halyk, for its part, placed a $100 million, five-year loan-note in an approach similar to ATF's, with WestLB as structurer and purchaser.

Bank TuranAlem (BTA), which rounds out the industry's top three, has yet to venture into the DPR market. ATF had a lending market share of 8% as of the end of last year, while KKB, TuranAlem and Halyk had 24%, 23% and 14%, respectively.

While ATF opted for a private route for its DPR debut, the bank is no market ingenue, having issued four eurobonds for a total $700 million, according to a report on Kazakh banks by Standard & Poor's. That paper matures between May 2007 and April 2012.

Fitch Ratings, Moody's and S&P rate ATF on a foreign currency unsecured basis at BB-'/'Ba1'/'B+', respectively.

The bank has been benefiting from growing liquidity and diversification of funding sources, including loan syndications in addition to eurobonds. And more generally, thanks to an economy flying high on giddy energy prices, the Kazakh banking system has become enticing to foreign equity investors as well. ATF is understood to be planning an IPO along with KKB. What's more, KKB and BTA already have foreign minority shareholders, while Halyk is trying to attract a strategic investor from abroad.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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