Structured finance investors with a taste for ruble exposure might soon have something to nibble on. In the works is a six-year final, RUR13.8 billion ($498 million) deal backed by leases linked to rolling railway stock. Morgan Stanley, CIT Finance Investment Bank, and TransCreditBank are joint leads, according to a presale report by Moody's Investors Service, which has given the deal's RUR12.6 billion A piece a provisional rating of Baa2.'

Like other transactions from Russia, the structure is not a pure true-sale. The assets, which are currently owned by a handful of leasing companies, and leased by Russian Railways, will be sold to the Russian branch of a Luxembourg-incorporated SPV, Red Arrow. This onshore portion of the deal's architecture is governed by true sale - albeit under untested Russian law - but the other nuts and bolts have a pledge feature. The purchase of the receivables is financed by a loan from Red Arrow International Leasing, an Ireland-based SPV. The structured notes, in turn, fund the loan. Red Arrow secures this debt obligation to the Red Arrow International Leasing by pledging, under Russian law, the leases and rolling stock to the issuing SPV.

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