Poland's BRE Bank has just closed what is thought to be the country's first ever asset securitization a 50 million zloty ($13 million) asset-backed commercial paper transaction backed by receivables originated by a pharmaceutical distributor's sales to hospitals.

According to Marcin Tarnicki, from BRE's capital markets department, the transaction, which has tranches ranging from six months to one year, should be privately placed in the local market in the next few days. The deal is strengthened, he added, because under Poland's health sector reforms, hospital debts are guaranteed by the government.

Sources in Poland suspect that the deal, which received the Central European Rating Agency's top rating, may be the country's first securitization, though there are also suggestions that a previous asset backed deal may have been quietly privately placed earlier in the year.

Though the deal is tiny compared to many international deals, it is likely to be followed by more sizeable transactions by the end of the year. Pakao S.A., Poland's largest bank, for example, is working on a $100 million deal backed by consumer loans (ASRI 11/1/99 p.1) which should be launched before the end of the year, according to the bank's head of debt capital markets, Cezary Smorszczweski.

Pakao is being advised by British law firm Allen & Overy, but several other originators are working with Western banks, including ING Barings, Citibank and ABN Amro, to structure deals backed by either consumer assets or export receivables. Citibank is rumored to be working with two exporters, each with hard currency receivables worth around $75 million.

The Poland Power Grid Company (PSE) hopes to put these deals in the shade, however, with a $1.2 billion securitization backed by a levy on consumer's electricity bills (ASRI 5/17/99 p.1). The transaction is intended to allow the liberalization of the electricity industry without damaging energy producers who have used long term contracts with PSE as collateral for bank loans.

PSE has yet to award a mandate, sources said.

All this takes place against a background of government efforts to improve Poland's murky securitization environment. These include proposals to scrap a requirement that bonds issued by entities with less than three years audited history (including SPVs) must be guaranteed by a bank and regulations that make selling loans impossible without informing borrowers.

Poland's budding securitization market should also be greatly boosted by recent social security reforms, which established private pension funds for the first time. "If Polish pension companies follow the pattern of Western ones, as expected, they should prove to be significant buyers of Polish debt in general and securitizations in particular," said a Warsaw-based rating agency analyst. MD

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