Page 109 - IFR Opportunities in Russian capital markets

CHAPTER05
ifrintelligence reports/Opportunities in: Russian Capital Markets
“The Soyuz issue was ground-breaking as it was the first to securitise cash flows inside Russia. It was doubly impressive as the structure received an extremely high rating,” says Alexey Boulgakov, a debt analyst with Aton. Details of this and other early securitisations are given in Table 5.1.
Soyuz was soon followed by the bank considered the main force behind Russia's consumer credit boom, Russian Standard Bank (Russky Standart), which pulled off the first securitisation of ruble- denominated consumer loans. Following that, Russian Standard organised the first ruble- denominated car loan securitisation and will follow up with ruble-denominated credit card receipts and mortgages.
Table 5.1: Russian ABS ratings
Amount Rating (senior tranche) Issuer’s rating Rate (senior tranche)
Source: Troika Dialog
So far, all the securitisations have involved consumer credit in some form, but the big innovation in 2006 was the passage in July of amendments that created mortgage-backed securities (MBS), which the experts believe will be a US$10bn business within a few years.
Russia's second biggest bank, VTB, was quick to follow up with the first US$500m securitisation of mortgages, and the most recent deal was an issue from Gazprombank subsidiary Sovintradebank, which issued an offshore MBS.
However, almost all consumer lending products are now being securitised. Russian Standard's Leonid Zolotaev says the bank has mandated the securitisation of its ruble-denominated credit card receipts and will do the same for mortgages in 2007; credit card lending is now the fastest growing segment of retail lending, overtaking unsecured personal loans in volume for the first time over the first six months of this year.
Growth prospects
Moody's David Mumzhui says Russia is unusual in that there is already a wide array of securitisa- tion asset classes on offer (see Figure 5.1), whereas other emerging markets tend to develop only one product – like credit card receipts – before moving on to the next.
Soyuz Bank10 HCFB 12
Russian Standard 12 Alfa Bank 11
VTB 34
City Mortgage Bank 33 MDM Bank 13 Russian Standard 17
US$50m –/Baa3/– €127m –/Baa2/– €350m BBB/–/– US$350m –/Baa3/– US$88m –/A1/BBB+ US$73m –/Baa2/– US$430m A–/Baa1/– €255m A–/Baa1/–
B–/B1/–
B/Ba3/– B+/Ba2/– BB–/Ba2/BB– BBB+/Baa2/BBB+ –/–/– B+/Ba2/BB– B+/Ba2/–
1mLIBOR+175 1mEURIBOR+250 1mEURIBOR+165 3mLIBOR+160 1mLIBOR+160 1mLIBOR+160 1mLIBOR+100 1mEURIBOR+115
Figure 5.1: Russian securitisation, by asset class, 2006 (%)
2% 10%
13%
18%
31%
Future flow
Auto
Lease receivables
Consumer loands
RMBS (Residential mortgage-backed securities)
Other
Source: Moody’s
26%
The rapid development of Russian securitisation, as seen in Figure 5.2, is a reflection of the lack of international banks in the Russian banking sector, which dominate in Central Europe after the sector was largely sold off in the 1990s and so the local subsidiaries have little problem raising cheap capital from their parents to refinance their credit portfolios.
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