Austria has historically done little by way of long-term securitizations, but last week its first publicly rated EURO400 million auto-loan and lease securitization, FACT-2001, originated by Porsche Bank AG, priced. According to market analysts, this may lay the foundation for future true-sale transactions under the country's securitization laws.

Unlike other auto-loan deals that have been in the market this year, FACT-2001 is not backed 100% by consumer loans. The breakdown across the whole receivable pool, which consists of 87% leases and 13% loans, is comprised of: 53.4% private individuals; 46.6% commercial borrowers; 73.6% new cars; 26.4% used cars.

The portfolio holdings were originated throughout Austria, with a large concentration in Vienna. Porsche Bank, not to be confused with the German-operated car manufacturer Porsche AG, is a wholly owned company of Salzburg-based Porsche Holding GmbH. It is a 100% family-owned company that counts among its core activities the importation of Volkswagen group brands including Audi, Seat and Skoda. According to Standard & Poor's, Porsche Bank will include the leasing and loan contracts in the pool as part of its normal business practice.

The notes, rated AAA' by S&P, priced at +22 basis points over the one-month Euribor and the A'-rated tranche priced at +55 basis points over the one-month Euribor. "We felt demand in the book, which we built in the last 10 days, ultimately reflected the pricing. I would say that it compares well to some of the other auto securitizations that have come to market," said Hans Juergen-Fritz of the transaction's lead managing team at ABN AMRO. "It's the first Austrian true-sale and a well-known name. The quality of the portfolio was very good and there was an opportunity to diversify for European fund managers."

Furthermore, it was an opportunity for the originator to move away from domestic funding. With Spain, Benelux, the U.K. and Germany counted among the participating countries, Porsche successfully gains access to the capital markets.

It's unlikely that FACT-2001 will open a floodgate of Austrian securitizations, but given the strong Austrian car financing market companies with the strong positioning of Porsche Bank AG might consider future securitizations. The question is, will these candidates have enough volume to enter the term market? "We would not be surprised if other companies chose this route," said Juergen-Fritz. "Porsche Bank Austria has said that they will consider the securitization market again."

Another deal on its heel

As if to reinforce that this country is ready to get into the swing of things, shortly after FACT-2001 priced, the State of Lower Austria was in the market with a EURO2.5 billion floating-rate securitization. Blue Danube Loan Funding GmbH is managed by Schroder Salomon Smith Barney and has been assigned a preliminary AA+' rating by S&P. The deal is expected to close sometime this month.

This rating is largely dependent on the foreign currency debt rating of the State of Lower Austria (the region that surrounds but does not include Vienna), rated an AA+/Stable/A-1+. According to S&P: "The repayment of principal and payments of interest and any amounts due on the notes will be unconditionally and irrevocably guaranteed by the State of Lower Austria until all notes are redeemed in full. The note guarantee ensures payment of any shortfall between the funds available in the issuer's account - after the satisfaction of all prior-ranking obligations of the issuer - and the amounts due on the notes."

The portfolio is composed of state-subsidized housing loans by the State of Lower Austria on or prior to December 31, 2000 to private individuals, housing co-operatives and local authorities and municipalities located in the State of Lower Austria. The mortgage loans included are typically made on small-scale buildings and large scale-buildings.

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