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23 December 2014

AK BARS bank has completed a securitization of mortgages through VTB Capital

AK BARS Bank has completed a securitization of mortgages through VTB Capital, which Global Capital understands will not be the last RMBS of 2014 for Russia’s domestic market.

VTB Capital structured a Rb2.5bn (€36m) deal for AK BARS, which it said was part of the state-owned Vnesheconombank's programme for investing in affordable housing and mortgages from 2010 to 2013.

A fresh plunge in the value of the rouble last week brought back memories of Russia’s 1998 currency crisis, but even after a Central Bank of Russia intervention investors fear a spate of defaults from smaller private banks and energy companies.

Andrey Suchkov, Head of Securitization at VTB Capital, said the transaction showed securitization can be “an effective mechanism for funding mortgages, not only in periods of economic growth, but also during more challenging periods”.

“In the current challenging economic situation, support for public development corporations, such as Vnesheconombank, is essential for the further development of the mortgage market in Russia,” he said.

The deal featured Rb1.4bn of Baa3 rated class 'A' notes, priced with a coupon of 9%, and Rb696.7m of Baa3 rated class 'B' notes priced at 3%. A Rb412.9 million class 'M' tranche completed the stack.

Corporate Communications VTB Capital