The City of Prague, capital of the Czech Republic, is set to launch the first publicly rated structured deal to come out of the country. The CzK3.75 billion ($99 million) transaction, called Praha Finance, will be used to finance a loan issued by investment bank ING Barings to the city. ING will also act as arranger and underwriter on the transaction. The deal is expected to come to market in early July.

The special purpose vehicle will enter into a swap agreement with ING and pay receivables from the loan in return for the coupons due on the notes issued. At maturity, the City of Prague will the pay the outstanding principal on the loan to the issuer.

Standard & Poor's has given the one tranche deal a provisional rating of A-plus, based on the rating of the loan itself, and that of ING in its role of swap counterparty and bank account provider.

It is anticipated that due to issuing in koruna, the City of Prague will be looking to tap local investors in the embryonic Czech structured finance market. Experts said that it will be interesting to see what kind of response the deal provokes: securitization techniques are still something of a mystery in Eastern Europe, but S&P expects that deals such as this will lead to a growing market in the region.

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