(MENAFN - Khaleej Times) Emirates NBD PJSC has sold an asset-backed securitisation (ABS) of UAE auto loans worth 19 billion yen (221 million), the first such deal from the Middle East and by the bank, the bookrunner, Citi said.
The majority of the notes were rated Aa2(sf) by Moodys Investors Service, and benefited from a guarantee by the Japan Bank for International Cooperation (JBIC) on the principal, which was another first, said Citi.
Middle East banks have not had access to the securitisation market for this type of asset. Securitisation has been mostly used against mortgages and real estate, said Sami Tabbarah, managing director, Citi.
Tabbarah said that banks in the region have sizeable consumer loan portfolios and selling them via ABS can provide important matched funding, on which regulatory pressure is building.
Securitisations backed by mortgages, once the bedrock of the structured finance market, have declined sharply since the credit crunch but deals backed by auto loans have been relatively robust.
Some 15.2 billion of the notes were guaranteed by JBIC and carried a coupon of Yen Libor plus 100 basis points. They have an expected maturity of 4.1 years and were placed with Asian institutional investors.
JBIC invested in the remainder of the transaction.
The transaction provides Emirates NBD with a very important term match funding at competitive pricing levels at a very critical juncture in the financial markets commented Rick Pudner, CEO of Emirates NBD. The success of this financing also underscores our leading position in auto loan finance as well as the importance we have placed on tight credit controls and state-of-the art data management and analytical systems.
The high quality of the pool in terms of diversity and loss history allowed for a very efficient transaction from Emirates NBD with regards to both credit enhancement levels and pricing terms despite the difficult economic environment, said Tabbarah. The transaction has been very well received in the market.
Having executed the last two securitisations in the region, including the Dh4 billion real estate backed sukuk for Sorouh in 2008, Citi believes securitisation is an important financing tool which is beginning to gain traction in the Middle east region and is pleased that Emirates NBD as the largest bank in the region by assets has taken the lead.
Securitisation financing allows banks and other issuers to more closely match fund certain assets, thereby removing much of the asset and liability mismatches currently on their balance sheets, said Atiq Ur-Rehman, chief executive officer of Middle East Division for Citi.
As the markets in the US and Europe also pick up, Citi is seeing a resurgence in interest for Shariah-compliant and conventional securitisation and secured finance across the region and across asset classes.