Moody's Investors Service last week upgraded the unwrapped and underlying ratings of deals backed by diversified payment rights (DPRs) that have Turkiye Garanti Bankasi (Garantibank), Turkiye Is Bankasi (Isbank) and Akbank as originators. The move brings the agency's grade for these DPR deals from Turkey's top tier banks in line with the rating on their credit card backed transactions and increases the breathing room of monolines with exposure to the Turkish DPR asset class.
The agency boosted to Baa2' from Baa3' the rating on Garantibank's 2005-E and -I tranches for a total $150 million and Isbank's 2004-C and -D tranches for a total $300 million. That same upgrade was applied to the underlying ratings of a host of DPR deals wrapped by Ambac, Assured Guaranty, CIFG, FGIC, FSA, and MBIA, Radian, and XLCA. Monolines egged on a Turkish feeding frenzy last year that amounted to $3.2 billion in wrapped deals.
While the upgrade won't cut the capital charges assessed by the monolines - only a hoist into a whole new ratings category could do that - it does generate more comfort. "It gives you protection on the downside," said the source at one of the insurers, referring to the fact that a dip into high-yield territory dramatically ratchets up the capital charge.
Moody's had assigned Baa2' unwrapped and underlying ratings to credit card transactions issued last year by Akbank and Isbank, which was then a notch above its ratings for DPR transactions from those banks. Standard & Poor's meanwhile, rated both types of deals from these banks BBB-.' The Moody's upgrade for the DPR transactions "give more conformity between DPR and credit-card deals," said a banker experienced in the sector.
The catalysts for the ratings boost from Moody's were the upgrades in the foreign currency deposit rating and local currency deposit rating of Garantibank, Isbank and Akbank.
Meanwhile, it appears the all-you-can-eat Turkish buffet last year wasn't enough for monolines. Talk is circulating that FGIC and FSA are wrapping a deal for Akbank led by WestLB and ING Financial Markets. Garantibank and Isbank have also been heard sniffing around for interest in arranging more structured deals.
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