Kazkommertsbank (KKB) is returning to the structured finance market with a $500 million, 10-year legal final deal consisting of three tranches and three insurers. Merrill Lynch and WestLB are joint leads, and pricing is timed for shortly after April 9. The transaction collateralizes diversified payment rights (DPRs).

As it stands, FGIC is wrapping a $150 million A piece, MBIA is insuring a $250 million B tranche, and the Asian Development Bank is wrapping a $100 million C piece. This marks the first time the multilateral participates. This in a deal for KKB, but the second time it has done so for a Kazakh bank, having wrapped a $100 million tranche in a deal originated by Alliance Bank last November. Thanks to the sureties, each piece of the deal carries triple-A ratings from Moody's Investors Service and Standard & Poor's. The deal's underlying ratings are Baa3' and BBB', respectively, and it is registered as both a Reg S and 144A.

This is the third DPR deal from KKB, Kazakhstan's largest commercial bank. Per ASR's records, the transaction is the first 10-year structured bond from any bank in that country. The move to push out tenors is another sign that the investment climate in Europe remains balmy. The deal doesn't start amortizing until June 2010.

KKB's DPR receipts are generated largely by local exporters receiving payments for their goods and by recipients of foreign direct investment. The bank processed about $6.9 billion in DPR flows during 2006, a 67% leap from 2005. U.S. dollar flows - the only ones included in the securitization program - made up 90% of the total. Collections are also made in rubles, euros and pounds sterling.

KKB has assets of roughly $19.7 billion and equity of $2.1 billion. Moody's, Fitch Ratings, and S&P rate the bank Baa1'/'BB+'/'BB+'.

Alfa prices

Elsewhere, Russia's Alfa Bank last week closed a euro/dollar deal backed by DPRs. Dresdner Kleinwort Wasserstein and Merrill were joint leads. A 145 million ($193 million), 2.6-year average life tranche went for 190 basis points over three-month Euribor, while a $200 million, 3.1-year average life piece priced at 200 basis points over three-month Libor. The euro tranche matched the pricing of a 230 million DPR tranche Alfa issued in December. The dollar piece priced 10 basis points outside a comparable $250 million tranche issued in December, a difference that could be due to the repricing of emerging market product since then.

Moody's and S&P both rated the Alfa deal on the cusp of investment grade: Baa3' and BBB-', respectively (ASR, 3/19/07).

Meanwhile, price guidance has come out on an RMBS from Russia's DeltaCredit Bank (ASR, 3/26/07). Arranged by originator parent Societe Generale, the deal is split into three tranches. A $180.9 million A piece, respectively rated A'/'A2' by Moody's and Fitch, was being marketed at 100 to 110 basis points over one-month Libor. A $15 million B tranche, rated Baa2'/'BBB+', has guidance of 150 to160 points over, and is not accepting any more orders, according to a source close to the deal. Pricing is slated for early this week.

Russian RMBS has so far shrugged off the U.S. subprime bust. "There's been no material impact here [in Europe], except maybe for the U.K. nonconforming deals," said the source. He added that investors were well aware that the DeltaCredit deal is backed by prime mortgages.

Denizbank deal slipped into conduit

Finally, in the emerging Europe neighborhood, Turkey's Denizbank issued a $150 million, seven-year transaction backed by DPRs. There are only sparse details on the transaction, which was understood to have been dropped into a conduit sponsored by the deal's arranger, Citigroup, according to a market source. An official at Citigroup didn't return calls as of press time. Rated BBB+' by Fitch, the transaction is the fourth off a program that has now generated $450 million in transactions.

Organic growth and acquisitions have fueled the increase of Denizbank's DPR collections. In January 2007, they hit $1.3 billion, up from $66 million in January 2000.

Denizbank is Turkey's seventh-largest private bank, with a focus on SMEs, exporters and retail banking customers.

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

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