The first Russian deal backed by diversified payment rights is expected to embark on a road show this week and issue shortly thereafter, but securitization devotees eager for a never-before true sale in Russian future flows will have to wait longer, according to a source familiar with the deal. That's because the five-year final, $300 million transaction from Alfa Bank is a loan-pledge structure along the same lines as a $300 million credit card deal originated by Rosbank and $1.25 billion in secured export notes floated by gas titan Gazprom.

Russian issuers have already shattered the true sale barrier in the arena of existing assets, but players say achieving the same for future flows from that country is far trickier.

The Alfa deal will likely pique interest for its novelty, and will no doubt be nudged along by the fact that DPRs comprise an emerging-market asset class with a solid history. Merrill Lynch and Dresdner Kleinwort Wasserstein are jointly leading the transaction. Mayer, Brown, Rowe & Maw and White & Case are legal counsel for the arrangers and the originator, respectively.

Moody's Investors Service, which gave the deal a Baa3,' is apparently the only agency assigning a grade, which could prove an obstacle for investors more comfortable with double ratings. On an unsecured basis, Moody's is the most generous agency in rating Alfa, giving the bank a Ba2.' The corresponding grades by Fitch Ratings and Standard & Poor's are B+' and BB-.'

The deal is registered as a 144A/Reg S. According to Moody's, the structural and legal protections inserted into the transaction, along with the healthy credit standing of the U.S. and European depositary banks designated by the structure, are among the deal's strengths.

Russia's Vneshtorgbank has also flirted with the idea of issuing a DPR deal, having awarded a mandate to DrKW and Deutsche Bank Securities for a transaction. The word on the street, however, is VTB's relatively high rating cripples the economics of a securitized deal. Fitch, Moody's and S&P assign VTB long-term ratings of BBB,' Baa2' and BBB,' respectively.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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