Securitizations out of Eastern Europe, the Middle East, Africa and the ex-Soviet Union totaled 6.9 billion ($8.1 billion) over the first 11 months of 2005, according to a report by Standard & Poor's. That figure for the region, commonly known as EEMEA, was a dramatic upswing from the 3.5 billion posted during all of 2004 and 2.1 billion for 2003.
Future flow structures are the most popular among EEMEA issuers, which S&P ascribes to the fact that they help shield against the credit risk posed by the sovereign where the originator resides. Indeed, a securitization typically hoists a deal beyond the sovereign ceiling.
"Existing-asset transactions are not as common as future flow ones since some jurisdictions lack either the domestic legal environment to support securitizations, have difficulty in obtaining currency swaps, or lack a strong domestic investor base," S&P analysts said in the report.
For that reason, originators are opting for cross-border issuance, which tends to be trickier for existing asset deals than for future flow deals, where the flows are often offshore to begin with.
Existing-asset deals out of EEMEA have lagged behind the future flow ones (see table). In the former asset class, South Africa is king. Over the last three years, the Sub-Saharan country has nearly monopolized existing-asset securitization. In the first 11 months of 2005, for instance, the country issued 1.8 billion of the total 2.1 billion existing-asset deals from EEMEA. Nor are South African originators confined to a single asset type, having tapped auto loans, credit cards, equipment leases, residential mortgages and aircraft leases. Interestingly, all the deals have been denominated in rand, according to S&P's chart of outstanding transactions. This makes the country one of the most vibrant issuers of local currency securitizations among emerging markets, putting it in the same league as peers Mexico and Chile.
On a country basis, the most voluminous issuance has come out Turkey. That country, which has this year been cranking out diversified payment deals in earnest, accounted for 42.6% of total EEMEA issuance from 2001 to November 2005 (see table). It was followed by South Africa, with 33.0%. Closing an RMBS in December last year, Latvia eked out the last position among the nine EEMEA countries that have issued securitizations, as tallied by S&P.
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