Seven months into the year, and FTPYME TDA CAM 1 has polished off the Spanish market with the last deal of its kind for 2002, however there is still plenty of room for other types of asset-backed deals. The EURO600 million ($592.1 million) CAM 1 deal is a securitization of cash flows of loans to small and medium-sized Spanish enterprises (SMEs) granted by Caja de Ahorros del Mediterraneo.
The transaction marks the sixth of its kind this year and features a guarantee from the Kingdom of Spain. The Spanish national budget in 2002 has allowed for EURO1.8 billion ($1.777 billion) to be allocated to transactions of this sort, and does not allow for more than EURO3.6 billion ($3.56 million) in outstanding debt. This transaction has chomped up the last bite granted by the Spanish Kingdom for the year.
Nearly 49% of the initial portfolio in this deal is secured on first ranking mortgages, and the remaining 51% are secured with guarantees, private backing or non-first ranking mortgages.
FTPYME TDA CAM 1, a special purpose vehicle (SPV), acquires a portfolio of loans from CAM as collateral for the issuance of fixed-income securities. The assets of the fund will be acquired by Titulizacin de Activos, S.G.F.T., SA (Sociedad Gestora) on behalf of the SPV. The Sociedad Gestora is a special purpose management company. The loans are mainly to obligors in Alicante, Murcia, and Valencia.
The Spanish Kingdom began allocating money from the national budget a few years ago in efforts to encourage the market. "The aim is to promote lending to these small and medium-size enterprises," said Charles Hand, an analyst at Fitch. "Under the FTPYME programme the Spanish Treasury guarantees up to 80% of double-A tranches and up to 50% of single-A tranches."
In order to obtain a guarantee from the Spanish Treasury, certain requirements must be met. "All of the guaranteed notes must be traded, all of the borrowers must be corporates domiciled in Spain and the net proceeds from the issuance must be reinvested in lending to these SME clients, within a year," said Hand.
Additionally, 50% of the portfolio must conform to the European Union definition of a SME. These companies can have no more than 250 employees, should have annual revenues not exceeding EURO40 million and total assets not exceeding EURO27 million.
With this transaction marking the sixth of its kind this year, it seems as though the Kingdom's initiative has taken flight. There were only three transactions of this sort completed in 2000 and another three in 2001. This final deal is being arranged by Titulizacin de Activos (TDA), which also arranged the first transaction of its kind, FTPYME ICO TDA 1 in 2000. TDA has been an active arranger in many of these deals over last few years.
Separately, Cedulas Cajas 3, a EURO$3.5 billion, 10-year repackaging of cedulas hipotecarias (mortgage-backed securities) is expected to close in the coming weeks, sources said. The deal is the third of its kind and involves 21 Spanish savings banks. Ahorro Corporacin Titulizacin (ACF) is leading the deal and the three major rating agencies have provided triple-A ratings.
Also sprucing up the Spanish arena is UCI 8, a EURO600 million Spanish MBS deal. As in UCIs previous deals, the assets backing this transaction consist of a pool of loans secured by first-ranking mortgages on residential properties located in Spain and personal unsecured loans related to home acquisitions.
