European market maturity may mean more repeat transactions with less innovative structuring, but investors always have room and appetite for first-timers. Bayerische Landesbank last week closed its novel German mail-order receivables structure with positive investor feedback, said a source at the bank.

The structure is the first publicly rated securitization of mail-order receivables in Europe - this asset class is typically funded via ABCP programs. Stefan Leipold at Bayerische Landesbank said that there were two main points that set the structure apart from other securitization transactions. For one, the mail-order receivables under the Zorro structure are not sold directly by the issuer; instead the issuer purchases the receivables from Quelle GmbH or neckermann.de GmbH - two of the major mail-order companies in Germany. The asset backing the notes is a certificate of indebtedness (CB-note), which will be issued by these mail-order companies and purchased by the issuer under Zorro No. 1 Finance. The CB-note, in turn, will be secured by the mail-order receivables that were bought by the issuer.

"The main problem is that there was no true sale of the assets," Leipold said. "The assignment of the mail-order receivables were arrived at through a very special legal point created for this transaction."

It would be possible to apply the legal point to other asset classes in Germany going forward, Leipold said, but at the moment, the bank is not working on any deals due to be launched in the short term.

Another point Leipold highlighted is that the transaction does not issue any notes at closing. "At closing, what we have is the commitment from investors that they are willing to buy these notes on an ongoing basis, but the notes won't be fully funded right away," he said. "If the issuer wants to get refinancing, they have the possibility of issuing notes, but on a flexible basis, which will see amounts increased or reduced quite easily."

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

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