Standard Chartered has completed a US$600mn securitisation issue for Turkiye IS Bankasi (Isbank) . This US$600mn issue by TIB Diversified Payment Rights Finance Company is the inaugural issue under Isbank’s new diversified payment rights (DPR) securitisation programme.
The issuer will issue three classes of notes:
The issuer will issue three classes of notes:
Both the 2004-A & B Series are rated Aaa and AAA by Moody’s and Standard & Poor’s, respectively, based on the financial guarantees provided by MBIA and Ambac. The 2004-C Series is rated Baa3 by Moody’s and BBB- by Standard & Poors.
This issue is a landmark deal in terms of pricing, size and maturity. The tight pricing for the AAA/Aaa Series set new benchmarks for DPR transactions globally. The issue achieved record pricing levels of Libor+33bp for the Series 2004-A issue and Libor+36bp for the Series 2004-B issue. The Series 2004-C issue with 10-year certificates was able to achieve benchmark pricing of Libor+183bp.
The issue is notable for being the largest issue size for any Turkish financial institution or corporate in the international debt capital markets. The issue is also the largest DPR issue internationally to come to market. More notable is the fact that the Series 2004-C notes are the first with a 10-year maturity to come to market under a Turkish securitisation programme. Contributing to the success of the 2004-C issue is the fact that Isbank is the first Turkish issuer to come to market with a securitisation issue rated BBB- from Standard & Poors.
This DPR securitisation programme is an important part of Isbank’s international funding efforts, providing Isbank with the opportunity to access term funding on a flexible basis and to take advantage of unique market opportunities as and when they arise.
The issue was significantly over-subscribed and has been distributed to a range of institutional investors located in the US and Europe. Peter Dow, director of ABS Distribution in asset securitisation at Standard Chartered in London, comments: “The distribution of this issue has been a great success for Isbank and the level of over subscription demonstrates the wide acceptance of Isbank by the investor community for Isbank’s first ever 144A issue in the capital markets.”
Commenting on the significance of the transaction, Noel Edison, managing director in asset securitisation at Standard Chartered in London, adds: “Through this issue, Isbank has demonstrated the importance of a properly established programme with paper rated investment grade both by Moody’s and Standard & Poors. We are particularly pleased to see Isbank issue investment grade paper with a term of 10 years – the first non-sovereign Turkish issuer to do so.”
Monoline guarantees were provided by MBIA for the 2004-A Series and by Ambac for the 2004-B Series and with this credit enhancement both Series were rated Aaa and AAA by Moody’s and Standard & Poor’s, respectively.
Ambac and MBIA are monoline insurance companies that provide AAA credit enhancement for a broad range of securities.
“We were impressed with how successfully Ambac and MBIA acted jointly to support Isbank for a combined US$500mn Aaa/AAA issue, which is also the largest credit-enhanced DPR issue ever, not just in Turkey. The transaction is a further indication of Ambac’s and MBIA’s continuing commitment to Turkey,” Edison adds.
Diversified Payment Rights (DPRs) are US dollar, euro and sterling-denominated payment orders created via Swift MT 103 or similar payment orders accepted by Isbank. DPRs are derived primarily from Isbank’s trade finance and other corporate businesses and are paid through foreign depositary banks.
Established in 1924 with the aim of assisting the rebuilding and development of the Turkish economy and establishing the modern day Turkish banking system, Isbank is today the largest private sector bank in Turkey in terms of total assets, loans, deposits and shareholders “equity on the basis of unconsolidated Turkish GAAP financial statements released to the Istanbul Stock Exchange.
Isbank provides a wide variety of corporate, commercial, investment and consumer banking products and services to its retail and corporate clients through its nation wide branch network and alternative delivery channels.
Among Turkish banks, Isbank is experienced as an originator and servicer of future flow securitisations having completed two securitisations since 2000 backed respectively by US dollar remittances and future Visa/MasterCard vouchers.
Standard Chartered’s Asset Securitisation Group was established in 2002 to enhance the range of capital markets financing solutions offered to clients across the world. Based in London, Hong Kong and Mumbai, the team leverages the bank’s on-the-ground presence in Asia, the Middle East, South Asia and Africa, and its strong capital markets capabilities in these markets, to arrange and distribute asset-backed and future flow transactions for clients globally.