As the subprime crisis metastasized into a global liquidity crunch last year, Russian banks stopped issuing cross-border structured deals.
A number of originators turned to warehousing assets, hoping the facilities would go to term in the foreseeable future. But the market still hasn't returned, and some are finding the step-up coupons for warehouse rollover to be steep - a few hundred basis points over Libor, by most accounts.
But that hasn't killed warehousing activity. Vneshtorgbank - a leading player and issuer of RMBS that has so far stayed out of the warehousing game - looks to join later this year.
"In the works we have a mortgage facility for VTB24, which we plan to close in the third quarter this year," said Victor Kisselev, deputy head of debt and trade finance at the originator. The warehouse for this retail bank unit of the VTB group is presently envisaged at $800 million, with a tenor of 12 to 14 months.
"We are going to term out this facility next year," Kisselev added. "Hopefully with this we will resume RMBS from Russia."
Meanwhile, MDM Bank, which has floated deals backed by diversified payment rights and auto loans, is also waiting for better conditions before tapping the market again.
When it does, the bank will eventually resume securitizing its car loan portfolio, which currently stands at $1 billion, according to Timur Kibatullin, managing director of MDM. The bank is also mulling the future securitization of its mortgage book, which is currently $440 million and growing by between $4 million and $6 million a month.
Some banks facing stiff rollover terms in warehousing, along with mortgage banks simply struggling to compete, have been selling off their portfolios. Among the buyers is VTB24, which is snapping up around $100 million a month.
The uglier cross-border market has spurred plans to stimulate homegrown sources of demand for ABS and MBS, with reports that Russia's state pension fund and the Bank of Russia's Lombard list - securities used for repos - will embrace currently off-limit structured deals. But the boost can be overstated. Kisselev said that asset classes apart from MBS won't benefit because they don't have a domestic legal framework. Kibattulin suggested the cross-border is still vital:
"These measures alone do not create ground for a stable funding environment [for domestic ABS]."
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