Having arranged the debut securitization for the North African republic of Tunisia, Moroccan boutique shop Maghreb Titrisation plans to do more. The investment bank has a contract to lead two more RMBS for Banque Internationale Arabe de Tunisie (BIAT) and is encouraging two or three other clients to follow suit, according to Maghreb CEO Hicham Karzazi.
While BIAT's deal, which closed May 22, went to only locals, Karzazi said that Middle Eastern investors might become buyers of Tunisian structured paper in the future. "There's a big appetite for assets in the Maghreb region coming from the Middle East," Karzazi said. "In Morocco, they buy dinar [denominated] deals directly; why not in Tunisia?"
Tunisia's maiden securitization totaled TND48.5 million ($36.5 million), parceled out in three tranches. P1 notes amounted to TND36 million and were rated Aaa.tn' on the national scale by Moody's Investors Service. They priced at 50 basis points over the TMM (Taux Moyen Mensuel du Marche Monetaire). P2 notes, rated Aaa.tn', totaled TND10 million and priced at 120 basis points over. S notes, rated A3.tn', were sized at TND2.5 million and priced to yield 220 basis points over. The P1 piece had a 2.9 year average life, while the other tranches had a seven-year average life.
Collateral consists of residential mortgages that had a current weighted LTV of 55.9% at closing. Among the deal's strengths is the subordination of the S notes and credit quality of BIAT, which has a Moody's rating on its foreign currency senior unsecured debt of Baa2', according to the rating agency. Weaknesses include limited historical data on Tunisian real estate in general and on the bank's loan portfolio specifically.
"They're relatively new in the mortgage market," Karzazi said. "They're trying to gain more market share." BIAT's deal is governed by a securitization law passed in 2001, which only covers banking collateral. "The law doesn't permit other assets," Karzazi said. But he added that a proposed change in the legislation should open the door to other kinds of collateral.
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