Two months after its structured finance debut, Turkey's Yapi ve Kredi (YKB) is ready for an encore. Via leads Standard Chartered and HVB, the bank is bringing to market a mixed euro/dollar placement backed by diversified payment rights (DPRs) and slated for issuance by the end of the month, according to a source close to the deal.
Reg-S registered, the transaction is structurally a carbon copy of the original, with the only material difference being the participating monolines and HVB, which didn't arrange the prior deal. FGIC has wrapped an A tranche totaling 115 million ($151 million), while XLCA covered a B tranche for $250 million. Legal final is eight years. The deal's ratings mirror those of the monolines, triple-A from Moody's Investors Service and Standard & Poor's alike. Underlying ratings stand at Baa2' and BBB-', respectively.
YKB's first DPR transaction - an eye-catcher as the largest non-government bond from Turkey - came with Ambac, Assured Guaranty, MBIA, and Radian in tow (ASR,12/18/06).
Non-Turkish DPR flows at YKB hit $12.8 billion in 2006, edging up from $10.4 billion in 2005 and $9.2 billion in 2004. Non-Turkish flows are payment orders that originate outside the country, while Turkish flows are those executed for other Turkish financial institutions, but settled abroad. Moody's includes a percentage of these flows in computing the debt service coverage ratio, while S&P excludes all Turkish collections in its DSCR calculation. Both agencies see this category of flows as more vulnerable to political risk and the rhythms of the domestic economy.
The transaction designates seven banks, including Deutsche Bank and American Express Bank, as depositary banks. Combined, they accounted for nearly 80% of the originator's eligible payment orders. In October, YKB completed a merger with Turkey's Kocbank, bringing the bank's total assets to YTL45.7 billion ($32.8 billion), according to a Moody's report.
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