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Eastern European securitization shows signs of life

To date, securitization in eastern Europe has been a very occasional affair. Turkey has seen a few future-flow transactions, Hungary has a relatively developed domestic mortgage bond market, but you can count the number of other transactions on the fingers of two hands. However, the market should pick up this year.

In Poland, Bank Zachodni WBK is preparing an innovative transaction that will securitize the receivables of several municipal authorities. The first tranche of the deal is likely to be around Zl100 million ($27 million) in size, though Albin Pawlowski, director of capital markets at BZ WBK, says the total could be increased to around Zl1 billion. The first tranche is due to be publicly listed in September. Pawlowski says he expects demand to come mainly from domestic investors.

The deal is one of very few Polish securitizations. In October last year, Morgan Stanley arranged the €74 million securitization of the commercial mortgages of 12 Polish department stores. The deal was originally marketed by ABN Amro and Bank Przemyslowo-Handlowy to domestic investors but the banks couldn't find enough demand, so Morgan Stanley was mandated to take it to international investors.

Before that, the last Polish securitization was in 1999, when BRE Bank securitized the receivables of pharmaceuticals company Urtica.

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