Early days for corporate bonds
Housing Fund of Finland (ARA) last month became the first borrower to issue a public European asset-backed deal since the devaluation of the rouble. It was something of a gamble, but bookrunners and the borrower were pleased.. "The pricing was quite aggressive, quite brave, and we were lucky to receive what we wanted," says Harri Hiltunen, Housing Fund director.
The deal involved a Fmk2.052 billion ($410 million) securitization of social housing loans through an Irish-registered special-purpose vehicle, Fennica 3. Two tranches of senior notes were issued, both rated Aaa by Moody's: a Fmk1.425 billion floating rate tranche paying 19 basis points over six-month helibor until borrower's call in May 2004, and 75bp over six-month Helibor thereafter until maturity in 2054; and a Fmk550 million fixed-rate note issue paying 4.6% until November 2005. There was also a privately placed single-A rated Fmk77 million tranche.
Fennica 3 is the third in a series of securitizations. The first, in 1995, involved $363.7 million, all placed with international investors. The second - in 1996 - was a Fmk1.507 billion issue sold domestically. The 1998 deal is the first to target local and international investors.