Duff & Phelps has formed a new London-based team that will focus on rating deals in the fast-developing structured finance markets of Central and Eastern Europe, the Middle East and Africa.
"The number of new transactions from new jurisdictions has got to the point where we need to devote a group to those specific areas," said Mitchell Lench, who will head the Emerging Markets Structured Finance Group. He added that Duff views each region as a distinct market requiring specialist knowledge: "Just because you understand the environment in, say, Mexico, does not mean you understand how things work in, say, South Africa."
Lench rejoined Duff in June from the Industrial Bank of Japan, where he has been working on emerging market and Italian securitizations, to take charge of the new team in London made up of Juergen Haferkorn, Herve Nedellec, Lara Patrignani and Ned Vidinli plus the structured finance analysts based in the agency's local and affiliate offices throughout the regions the team will cover. He reports to Damian Thompson, the head of structured finance in London.
The agency has several offices and affiliates in those regions and plans to open several more, including joint venture operations in Africa and the Middle East.
Lench will also be responsible for leading Duff's efforts to convince Western European investors to take more interest in emerging market securitizations. At present, nearly all emerging market deals particularly future flow transactions are sold to institutional investors in the U.S., leading to some investors filling up with deals from certain countries, such as Turkey. "It would be good to have a little more diversification in the investor base and as we see Western European investors coming down the credit spectrum and buying triple-B pieces, we hope that this could translate into buying emerging markets structured paper as well," he explained.
In other rating agency news, Fitch IBCA recently announced a cooperation agreement with CARE, a domestic Indian rating agency, in a move which Fitch said will have an emphasis on structured finance and enhance global access for Indian issuers.
"Given the huge funding requirements of the Indian economy, particularly in the infrastructure sector, and the relatively limited amount of resources that can be raised locally, we believe that an increasingly large number of companies will need to access the international bond markets," said Robin Monro-Davies, Fitch's CEO. MD