An anticipated debut RMBS from Russia's Fannie Mae crossed a threshold last week, garnering a rating from Moody's Investors Service. Citigroup Global Markets is leading the ruble-denominated transaction, which was in the marketing phase last week.

London is apparently on the roadshow itinerary, evidence that the arranger is targeting foreign investors.

To be issued by the Agency for Housing Mortgage Lending (AHML), the transaction is split into three tranches. A RUR2.9 billion ($113 million) piece is rated A3', and a RUR264 million tranche Ba1'. Moody's did not rate a RUR131 million piece.

The deal is the first domestic securitization from Russia with tranching, and the second RMBS to have nearly every aspect of the structure fall under local jurisdiction. The collateral behind the transaction consists of mortgages from over 80 regional originators - both bank and nonbank entities - operating in 55 regions of the Russian Federation. Sources have said that Citigroup faced tough obstacles in crafting a deal with such far-flung collateral in an immature market. Dealing with the hydra-headed network of regional AHMLs would be one of the more exasperating stumbling blocks in such a deal, according to sources (ASR, 4/25/07).

The mortgages behind the loan are ruble-denominated, which pre-empts the kind of currency risk often faced by existing asset dollar deals from Russia and other emerging markets. This is the second ruble MBS from Russia. The first was issued by Gazprombank, backed with a pool of mortgages from a number of local banks and non-bank entities from outside the main metropolitan regions.

While investors still appear to have a strong appetite for foreign currency denominated ABS and MBS from Russia, the ruble variety is bound to win more and more friends, sources said.

At the same time, the growth of deals governed by local legislation, as opposed to foreign laws, is also a good bet.

"We understand there is a drive for more domestic issuance," said Igor Zelezetskii, an analyst at Moody's. "There are strong indicators that the key regulator would like to bring as much issuance onshore as possible."

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

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