Russia: Building a mortgage market

Investment bankers scouring Russia for the next juicy deal are salivating at the prospect of mortgage-backed securities written off Russian property.

Until the end of last year, legal and economic obstacles kept the Russian property business strictly within the domain of well-connected and deep-pocketed developers. Several essential elements of the mortgage industry had been absent, such as the lender’s ability to evict and foreclose and the protection of private property rights.

But the expected offering of a small tranche of mortgage-backed debt later this year could mark the start of what could eventually become the second-largest market for Russian debt after sovereign issues.