HCFB Plans Rare Russian Consumer Loan ABS

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Home Credit & Finance Bank (HCFB) is planning a RUR10 billion ($314 million) consumer loan securitization, according to a Moody’s Investors Service presale report.

This is the second securitization of consumer loans in Russia by HCFB that has been rated by Moody's. The first deal, called Eurasia Structured Finance No.1, was completed in 2005.

The loans are fixed rate, ruble-denominated cash loans without a specified purpose, offered to existing HCFB borrowers. The borrowers have a positive credit history.

As of July 31, the provisional portfolio of eligible assets consisted of 540,959 loans with a weighted average seasoning less than 8 months.

The bonds, which are due in 2021, havs been assigned preliminary ratings of ‘Baa3’ by Moody’s. A subordinated and unrated funding tranche that is sized at RUR 3.3 billion has also been issued. It is structured as a three-year revolving cash securitization of consumer loan receivables   

The structure uses a dual company structure. Under this arrangement, the assets will be sold by HCFB to a special purpose vehicle in the Netherlands. The Dutch purchaser will be funded by a loan from HCFB, which will be funded in turn by selling the bonds.

“Ultimately, the structure  envisions that cash flows from the assets held at the purchaser will be applied to repay the issuer loan, which in turn will repay bondholders,” Moody’s said in the presale.


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