Last week, the Ukraine produced the country's first residential mortgage-backed deal in the public market. With industry leader Privatbank as originator, a $134 million, 3.4-average life A piece priced at 210 basis points over one-month Libor, somewhat wide of the 200 basis-point price guidance. Fitch Ratings and Moody's Investors Service respectively rated the senior chunk BBB-' and Baa3'. A $37 million, 7.2-average life B tranche yielded 375 basis points over, at the tight end of guidance. That piece garnered respective ratings of B+' and Ba3'. UBS was the sole arranger.

With the A tranche rated investment grade and the B notes a few notches into high yield, the books had starkly different investor profiles. ABS veterans of the European market bought into the A tranche, while the B book consisted wholly of emerging market buysiders. "[The ABS investors] were looking at the structure [and asking] what do we need to get in a return?" said a source close to the deal. He added that the emerging market crowd took outstanding Ukrainian bank paper as a benchmark, given the ratings proximity. The deal was Reg S, ending up entirely with European investors.

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