Gazprombank is courting foreign investors with a cross-border RMBS, now on roadshow as the Russian bank readies another, similarly collateralized deal preplaced in the domestic market (ASR, 11/27/06).
With Barclays Bank as bookrunner, the international transaction earned an A3'rating from Moody's Investors Service on a 143 million ($570 million), 35-year legal final senior tranche. That is two notches higher than the Baa2' grade attached to the RUR3 billion ($114 million), 30-year final domestic RMBS.
While the deals aren't perfect comparables, the ratings discrepancy still underscores the agency's approach to a budding RMBS market like Russia's, where legal uncertainties can curb a deal's credit standing. This works more to the disadvantage of the domestic transaction, in which local law governs every feature.
"What you see is that for the first time a Russian law-governed mortgage agent is being used in an RMBS transaction, so we ran into a number of legal issues," said Oscar Heemskerk, Moody's assistant vice-president. "The concept of trust is not developed under Russian law."
The international deal, in contrast, has a foreign component, an Irish-domiciled SPV that will issue the notes. "The issuer is a fully ring-fenced, multi-cell repackaging vehicle which has been involved in a range of repackaging transactions supported by Barclays," Moody's said in a report. A known commodity when it comes to securitization, Irish law naturally offers more comfort than Russian law.
Neither deal, however, can escape the effective ceiling imposed by the Russian Federation's local currency rating of A1.'
Neither structure features the re-registration of the mortgage certificates in the name of the respective issuer. "While re-registration of the certificates in the Immovable Property Register is desirable, through discussions with legal counsel we have become comfortable that the transfer of title to the mortgage certificates and all accompanying rights will be recognized by the competent Russian courts as being effective even in the absence of a registration", Heemskerk said. Allen & Overy provided legal counsel for both transactions. Mortgage certificates were created in 1998 to ease the transfer of mortgage receivables and the securitization of loans.
Standard & Poor's rated the 143 million senior piece of Gazprombank's international RMBS BBB+'. Aside from this tranche, the deal also contains a RUR518 million, 35-year final B tranche, rated Baa3'/'BB' by Moody's and S&P, respectively; and a RUR346 million C piece, rated Ba3'/'B'.
As of press time, S&P hadn't released a report on the cross-border transaction, according to sources at the agency. The agency didn't rate the domestic, ruble-only RMBS.
The weighted average current LTV of the underlying pool is 66.45% and the related properties are scattered through the country. With 12.7% of underlying homes, Bashkortostan is the only region accounting for more than 9% of the collateral. Barclays is providing a liquidity facility of the deal equal to 6% of the outstanding asset balance.
The transaction is timed to price the end of the week of Dec. 4 or the following week, according to a source close to the deal. The domestic transaction is not a market deal. It is expected to be sold to a brokerage related to Gazprombank, which will then distribute it to investors, according to a market source.
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