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Middle East: Securitization hots up with second Saudi deal

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Saudi Arabia’s Kingdom Instalment Company is planning to come to market with its second Shariah-compliant Saudi Arabian securitization transaction, the second part of its KSA MBS residential mortgage-backed programme. Kingdom’s announcement comes a month after Tamweel, a Dubai mortgage lender, finalized its plans to sell up to $1.1 billion of sukuk bonds, with a $300 million Shariah-compliant tranche backed by residential mortgages.

KIC previously came to the market in July 2006 with a $18 million 14-year securitization deal. Unicorn Investment Bank and Standard Bank closed the deal on July 18. This second securitization will again be led by Standard Bank and is expected to have a similar structure to its predecessor. KSA MBS I was backed against first-lien home loans and issued via a Cayman-domiciled special purpose vehicle.

Simon Stockley, adviser to the board of KIC, confirmed that the new transaction will be a step up from before, when he said at the Euromoney Securitization Middle East Conference in Dubai that the new transaction would have "one of the three major ratings agencies" rating the deal, not just the local Capital Intelligence agency as before, and will offer $400 million in notes."