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.
Following the lead of its peers, UBS is understood to be eyeing Russia, the most fertile ground for existing asset securitization in the region.
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