Turkiye Is Bankasi (Isbank) priced last week the first public Turkish deal to earn an underlying investment-grade rating from Standard & Poor's. Led by Standard Chartered, the $500 million transaction was split down the middle between seven-year and eight-year bonds. The slightly shorter paper, wrapped by MBIA, priced at 33 basis points over three-month Libor, according to a source familiar with the deal. The eight-year, backed by an Ambac surety, yielded 36 basis points over. Pricing was on Nov. 12; settlement is slated for this Monday.
Apart from the two larger pieces, a quietly placed 10-year $100 million tranche was issued at the behest of a single investor, according to sources. Those notes were unwrapped and priced at 183 basis points over Libor. While the insured pieces predictably carried triple-A ratings, the naked chunk was rated BBB-'/'Baa3' by Moody's Investors Service and S&P, according to the source. Pricing came within the guidance range for all the pieces.
The wrapped piece garnered the tightest spread over Libor for an emerging market transaction backed by diversified payment rights (DPRs), which are essentially electronic money flows, according to a source close to the deal.
The more furtive unwrapped tranche was a ground breaker on another front as the longest-dated deal ever from this asset class. However, the seven-to-eight year range typical for DPR transactions is unlikely to change, the source said.
Isbank processed $12.8 billion of DPR flows in 2003, a 77% jump from 2000 (see ASR 11/08/04).
Following in Isbank's wake, Standard Chartered had also brought a transaction for Finansbank to market, backed by DPRs as well. That five-year transaction was upsized to $350 million, from $200 million initially. It priced at 235 basis points over Libor on Nov. 16, with settlement slated for Nov. 23. Moody's rated it Baa3.'
The deal is reportedly the largest-ever unwrapped transaction in the DPR sector. In the larger arena of financial future flows, however, Visanet's $500 million credit card-backed deal - issued mid-last year - has yet to be unseated.
Finansbank's DPR volumes leapt 44% in 2003 and 53% in 2002 (see ASR 10/25/04). In both the Isbank and Finansbank transactions, White & Case acted as legal counsel for the issuer. Standard Chartered retained Mayer, Brown, Row & Maw as cross-border counsel on the transactions and Turkish firm Pekin & Pekin on the domestic front.
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