"If you are a prime and acknowledged originator of assets there is no central and eastern European pricing premium"
Raiffeisen was first to market, with a securitization of vehicle loans originated by its Polish leasing subsidiary, Raiffeisen Leasing Polska. The Zl1 billion ($410.8 million) transaction with a weighted average life of 2.8 years was the first international asset-backed issue from central and eastern Europe this year. Although pricing on the private placement was not publicly disclosed, Georg Feldscher, head of strategic portfolio management at Raiffeisen International in Vienna, says that it was in line with pricing on public transactions that emerged before the asset-backed market in central and eastern Europe was effectively closed down last summer on the back of the fallout from the problems in the US sub-prime mortgage market. "If you are a prime and acknowledged originator of assets there is no central and eastern European pricing premium," says Feldscher, adding that Raiffeisen Leasing Polska has been offering vehicle leases for more than 10 years.
Although securitization is important for Raiffeisen Leasing Polska, it is by no means its only funding avenue. "Raiffeisen Leasing Polska doesn’t rely exclusively on securitization, it also has access to the well-developed capital and bank lending markets in Poland," says Feldscher, adding that the transaction had been placed with a mix of supranationals and private sector banks. "These are real money investors who are familiar with the underlying risk and understand how to analyze it."
Feldscher says that because ABS issuance from central and eastern Europe has performed well recently, the investor base for the Polish transaction was similar to that for pre-US sub-prime crisis deals. Raiffeisen is looking to secure assets from Bulgaria, Hungary, Romania, Russia and Ukraine later this year, he adds, admitting that for the foreseeable future the issues are likely to be structured as private placements. "We don’t expect to see any public deals before the fourth quarter, but there are investors who want to invest in securitizations from the region, albeit in smaller size and at higher pricing than last year."
Sole arranger UniCredit Aton has brought the first ever cashflow collateralized debt obligation from Russia. The $160 million equivalent Moscow Region Pulse (public utility loans securitization) issue was secured against loans made in 2007 to small and medium-sized enterprises by Moscow Mortgage Bank (MZB) and consists of a senior tranche of Rb2.29 billion ($93.5 million) and a junior tranche of Rb1.58 billion. Commenting on the rationale for the deal, MZB chairman Kamil Narbekov says: "The transaction aimed at reducing the costs of the MZB’s borrowings and at the same time at expanding borrowing opportunities for our customers. Our clients’ borrowing needs are huge, so we are using this transaction to reduce funding costs and on the other hand increase funding volumes."
Dmitry Kozodoy, director of securitization at UniCredit Aton in Moscow, says that as well as marking the first true CDO for Russia, the Pulse deal, rated Baa1 by Moody’s Investors Service, was also notable for being the first-ever investment-grade cashflow CDO related to a single emerging market country.