Moody's Investors Service and Standard & Poor's have released their assessments of a roughly $750 million-equivalent transaction from Turkey's Yapi ve Kredi (ASR, 11/27/06). Predictably the ratings mirror those of the monolines wrapping each tranche of the deal, which is backed by diversified payment rights (DPRs), and is now in the market.
Wrapped by Assured Guaranty, a $175 million, eight-year final A series is graded Aa1' by Moody's and AAA' by S&P. With MBIA providing coverage, a $200 million, eight-year final B tranche notched a triple A from both agencies. A Radian-insured seven-year final C piece sized at $115 million reached Aa3' and AA' from Moody's and S&P, respectively. Finally, a wrap from Ambac earned the only euro-denominated slice - an eight-year final 200 million ($265 million) tranche - triple A from both agencies.
The underlying ratings for all tranches are Baa2' and BBB-' from Moody's and S&P, respectively. At B1' and BB-', the Republic of Turkey scores a good deal lower, underlining the view of both agencies that the Turkish government is deterred from meddling with the transaction by several factors, notably the strength of the structure, the systemic importance of Yapi Kredi, and the damage to its image that the government would incur by interfering in a market deal.
In October, Turkish peer Kocbank was merged into Yapi Kredi. The banks' combined DPR orders hit $32 million last year and are on track for healthy growth, with the figure reaching $22 million in the first seven months of this year, according to Moody's.
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