Russia's first mortgage backed security is remarkable for a number of reasons, but the most compelling is this: private housing in the country scarcely existed before the 90s. By historical standards, the country's move from private property to widespread home ownership to the birth of the mortgage has been more a breathless race than a gradual evolution. And last year, state-owned JSC Vneshtorgank (VTB) took the baton.

With Barclays Capital and HSBC as leads, on July 4 the originator issued a multi-tranche deal backed by dollar-denominated mortgages. A $74.2 million A' tranche, with a 28-year final and 3.6-year average life, priced at 100 basis points over one-month Libor. Fitch Ratings and Moody's Investors Service initially rated the deal BBB+' and A1', respectively. Only a month later, Fitch upgraded the rating to A-' after boosting the originator's rating.

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