Emerging markets

Attracting smaller investors in Brazil to certificate of real estate receivables (CRIs) has been a challenge due to the lack of a secondary market and a host of criteria — including concentration criteria — that originators must follow to issue CRIs smaller than R$300,000 ($184,000).

Brazil’s leading mortgage originator Caixa Economica Federal today closed the R$232.8 million senior piece of its largest ever RMBS, said a source close to the transaction. The yield came to 10.5% over the TR, a benchmark savings rate.

Fitch Ratings has set up a page of performance markers for structured finance deals across the globe on its web site, the agency said today. The page will link to over 40 performance-based products, and in part is a response to investor demands for more transparency. Among its features are U.S. RMBS performance and loss metrics, Australia’s RMBS Dinkum Index, and the Mexican RMBS Performance Update.

The Brazilian Central Bank’s efforts to rein in consumer lending growth are bearing fruit (see table below), a development Moody’s Investors Service sees as a credit positive.

Banco Santander Brazil has raised $100 million on the U.S. private placement market through a diversified payment rights (DPR) deal, according to sources.

ABS investors' search for yield has taken them to an interesting place, where products that were once marginal are now the main attraction. In vogue are decidedly esoteric deals, ranging from whole business securitizations to structured settlement transactions.

As with their counterparts in other areas of structured finance, emerging market players have been mulling over the question of where exactly their deals fit in the new regulatory landscapes of Western Europe and the U.S.

Standard & Poor's, along with Moody's Investors Service and Fitch Ratings, downgraded billions of dollars structured transactions in the summer of 2007, resulting in a wave of criticism. So when Deven Sharma was named S&P president on Sept. 1 of that year, he kicked off a reform program that continues today.

Turkey’s DenizBank has issued €300 million of bonds backed by diversified payment rights (DPRs) through five series of notes via WestLB. The transaction was a club deal, going to multilaterals the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), the International Finance Corp. (IFC) and the Deutsche Investitions- und Entwicklungsgesellschaft (DEG). The arranger itself took a piece as well.

Sole lead Santander Investment Securities priced today a $160 million, 10-year deal backed by payment obligations linked to a pool of equipment that Mexico’s Corporacion Geo uses to build houses, said a source close to the deal. The yield came to 9.75%. Fitch Ratings and Standard & Poor’s rated the deal ‘BB-’. Fitch said that the rating is linked directly to the ‘BB-’ rating of Corporacion Geo, as the company is on the hook for the payments. The payments are made under the terms of a service agreement entered into by Corporacion Geo, various of its units, and Geo Maquinaria in exchange for the machinery utilization services for Corporacion Geo and its units.

With the bulk of Kazakh transactions backed by diversified payment rights (DPRs) having been paid down over the past few years, it is refreshing to see that ATF Bank is extending the life of its outstanding DPR notes, even with only $100,000 left.

Turkey’s Denizbank is out with a $300 million structured deal consisting of five series, all scoring ‘BBB+(exp)’ from Fitch Ratings. West LB is the arranger. No word yet on whether private-sector investors are potential buyers but one market source said that a multilateral is buying at least a portion of the deal. In an interview with ASR earlier this year, Noel Edison of the European Bank of Reconstruction and Development had indicated that the institution would be funding additional Turkish banks this year via DPR programs following a deal in late 2010 with Garanti Bank.

Two years ago, Shariah-compliant bonds, or sukuk, began facing the first major test of their structures. The global crisis, paired with overinvestment in the Gulf Region, conspired to trigger a number of defaults that some observers believed would prompt investors to drill deeper into deals, and possibly favor those that were true securitizations.

The FDIC held a meeting March 29 to discuss its risk retention rules and the much debated QRM qualification.

Commonwealth Bank of Australia issued a new AUD1 billion ($1.03 billion) prime RMBS from its Medallion trust series.

SKS Microfinance announced the securitization of receivables worth Rs 550cr ($12.3 million) from microfinance (MFI) borrowers.

K&L Gates hired Howard Goldwasser and Xavier Ruiz for its New York office as partners in the finance and corporate practices, respectively.

The American Securitization Forum (ASF) opened a Washington, D.C. office in an effort to further its advocacy efforts on behalf of the securitization markets.

In a recent report, Fitch Ratings said that risks inherent in Brazilian multi-seller/multi-obligor ABS have become more heightened in recent deals backed by factoring company receivables. Generally, factoring companies in Brazil are privately held businesses that buy trade receivables from a variety of companies at a discount.

StormHarbour made four new senior appointments in its Hong Kong and Singapore offices. Aaron Tan has joined as senior advisor. Tan, who reports directly to Principal and Asia-Pacific Chief Executive Officer Water Cheung, was previously a managing director and head of Hong Kong coverage, investment banking and debt capital markets at Barclays Capital. Together with other client-focused areas, Tan will be advising on and originating real estate transactions. In Singapore, Jean-Christophe Levens, Marc-Antoine Thiriez and Hugo Virag-Lappas, all former founding partners of infrastructure advisory firm called Partners in Infrastructure, have joined as managing directors, focusing on building out StormHarbour’s Asia-Pacific infrastructure finance business. All three hires report directly to Vincent Moge, principal and head of the Singapore office and Asia-Pacific sales.