Turkiye Garanti Bankasi issued paper backed by diversified payment rights last week, breaking a silence that Turkish banks have maintained since last November. Wrapped by MBIA, the $300 million, eight-year transaction priced at 24 basis points over three-month Libor. Dresdner Kleinwort Wasserstein led the transaction, which has a 5.51-year average life and three-year interest-only period. The settlement date is May 20. Moody's Investor's Service and Standard & Poor's have rated it Triple-A.

The underlying rating from S&P is BBB-', while the agency's rating on Garanti Bank is BB-'. The deal is a securitization of all current and future diversified payment rights in the form of U.S. dollar-, euro-, and sterling-denominated payment orders. In its report on the deal, S&P noted that "total flows (excluding those generated by Garanti's offshore branches and within Turkey) in U.S. dollars, euros, and British pound sterling [increased] to US$13.6 billion in 2004 from $10.8 billion in 2003." The agency also pointed out a number of structural features that shield the deal from sovereign interference. The Republic of Turkey has a foreign-currency rating from S&P of BB-'.

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