VTB Group and AHML have completed securitization of the VTB24 mortgage portfolio, issuing RUB 48.2bn in mortgage bonds within the Agency For Housing and Mortgage Lending (AHML) framework “Mortgage-backed Secuirites Factory”. The single-tranche mortgage securities are a new securitization instrument guaranteed by AHML. The bonds are intended for placement among a wide range of investors. In the near term the bank plans to offer the bonds to be placed in the market.
The nominal value of one bond is RUB 1000. The coupon rate is fixed at 11.50% per annum.
Andrey Suchkov, Senior Vice President at VTB Bank, Head of Securitisation at VTB Capital, said: “We expect this new securitisation instrument to solve the issue of standardising the levels of risk in mortgage-backed securities and to help reduce the average market mortgage rate over the long term. The security of these bonds and their quasi-sovereign status is a significant advantage for investors. It should also be noted that they feature a preferable tax status, reduced capital requirement ratio, and provide a higher yield than OFZ."
Irina Balkarova, managing director, AHML, commented: “The deal with VTB Group is a significant transaction as part of the program of issuing single-tranche mortgage securities guaranteed by AHML. In 2017, over 85% of mortgage securitization transactions were executed as part of the “Mortgage-backed Secuirites Factory” program, and the overall bond issuance volumes within the program exceeded RUB 100bn. Next year, we will continue working with banks to jointly build a liquid market for mortgage securities in Russia, and we expect to significantly increase the volume and number of transactions to issue single-tranche mortgage securities guaranteed by AHML”.
The total value of VTB Group’s mortgage portfolio, including the securitization, is RUB 1.1trn as of November 1, 2017.
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