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VTB kickstarts Russian RMBS market

Inaugural mortgage securitization is sign of a fast-developing market.

Russia’s mortgage market is growing fast as demand for new housing takes off

Vneshtorgbank opened the way for Russia’s banks to securitize their fledgling mortgage portfolios after it sold the first ever securitization of mortgages from the country at the beginning of July. The $88.3 million transaction, arranged by Barclays Capital and HSBC, is backed by dollar-denominated loans that VTB has made to customers in Moscow and St Petersburg. The mortgage pool consists of 1,696 mortgages, of which 89% originated in the Moscow area.

Analysts say that it made sense for VTB, as a state-owned player, and the second-largest bank in the country after state-owned savings giant Sberbank, to be the first to access the asset class.

“The fact that the originator is a major-state owned bank of systemic significance, with an important international reputation, partly mitigated Fitch’s concern that a true sale might be successfully challenged upon VTB’s insolvency,” says Fitch Ratings RMBS analyst Pablo Perez. “VTB is helping to execute the government’s social agenda of developing the housing market in Russia, and this is seen as reducing the risk of any arbitrary politically driven legal outcomes.”

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