South Africa's securitization market is enduring a rite of passage that will attest to either the strength or weakness of transaction structures from the region. Siltek, which securitized its assets through a conduit dubbed Mettle, is putting the young market through its corporate malfeasance paces.

According to market sources, $25.06 million equivalent of Siltek's debt was transferred to the special purpose vehicle Xavier Trading. First Rand Merchant Bank (RMB) issued the SPV $15 million equivalent that would eventually be made available to Siltek. Now that the company has declared bankruptcy, liquidators are challenging the securitization structure on the grounds that the transfer of the assets to the SPV defrauded creditors and evaded tax legislation.

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