OREANDA-NEWS. The Agency for Housing Mortgage Lending (AHML) has provided support for a new off-balance issue of mortgage-backed bonds by Open Joint-Stock Company AIKB Tatfondbank.

In the course of the transaction, the originator Open Joint-Stock Company AIKB Tatfondbank placed three tranches ("A" (senior), "B"(mezzanine) and "C" (junior)) of mortgage-backed bonds totalling 2,656,445 thousand roubles. The value of the trenches is:

"A" - 2,382,831,000 roubles,

"B" - 132,822,000 roubles,

"C" - 140,792,000 roubles.

The coupon rate for "A" class bonds was set at 11%.

Open Joint-Stock Company AHML acted as the guarantor, settlement agent and back-up servicer, providing 'cold' service. The financial risks were insured by Open Joint-Stock Company IC AHML. The transaction was organized by Sberbank CIB[1].

In the Russian practice of mortgage securitization, the transaction with Tatfondbank is the second transaction where the financial risks insurance was used as an additional (external) mechanism for the credit strengthening of an issue of mortgage-backed bonds. Open Joint-Stock Company IC AHML insured loans being a part of the mortgage collateral for a period till legal final maturity. The originator's decision to include the insurance in the credit support contributed to an increase in the efficiency of the transaction - the amount of the junior bonds tranche was reduced by 50% while maintaining the same reliability level of the senior one.

"In the current market situation, originating banks are trying to further reduce the risks of mortgage-backed bonds by engaging reliable infrastructure companies into cooperation. AHML GC is one of the few in the securitization market that provides the entire range of infrastructure services to originators to work with mortgage portfolios, and provides the insurance of financial risks of investors through IC AHML. Originator's use of the services of AHML GC increases the reliability and investment attractiveness of the MBS issued. The joint coordinated work of the teams of Tatfondbank, AHML GC and Sberbank CIB allowed to close the transaction successfully,"- commented on the transaction Iraida Shtyrova, Director, Department of Development and Infrastructure of Master Servicing, AHML.

"In the completed off-balance transaction on the securitization of mortgage loan portfolio, we have managed to achieve target results: 89% of the issue was assigned to the senior class. This was due to both, a good credit quality of our mortgage loan portfolio, and the availability of well selected professional partners", - said Sergei Meshchanov, Deputy Chairman of the Board of JSC AIKB Tatfondbank.

"Effective mechanisms for structuring were used in the transaction resulted in significant reduction of the junior tranche amount. In the difficult market conditions, the closing of this transaction is an absolute success of Tatfondbank, said Tengiz Kaladze, Director, Head of the Securitisation Department, Investment and Banking Department of Sberbank CIB.