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Turkey’s Yapi Kredi looms with hefty $750 DPR

Published 2 Min Read

Four months after Yapi ve Kredi was heard buzzing about a potential securitization (ASR, 7/31/06), the Turkish Bank is launching a roughly $750 million, 5.5-year deal backed by diversified payment rights (DPRs). Led by Standard Chartered and HVB, the deal from this ABS neophyte is split into four tranches, each wrapped by a different monoline, according to sources.

Ambac is wrapping a 200 million tranche; MBIA, a $200 million piece; Radian, $115 million; and Assured Guaranty, $175 million. Monoline insurers have teamed up before in Turkish DPR transactions.

The corresponding rating agencies – likely to be Moody’s Investors Service and Standard & Poor’s given the monolines involved – hadn’t issued press releases on the deal as of press time. Fitch Ratings, Moody’s, and S&P give the bank foreign currency corporate ratings of BB’/’B1’/’BB-‘, respectively.

Yapi ve Kredi merged with Kocbank in October 2006. The combined bank will have a 10% share of Turkish banking assets, placing it among the top four in the country.

Elsewhere in the neighborhood, Russia’s MDM Bank closed a 225 million, five-year legal/2.5-year average deal. The collateral consists of DPRs, which had become an endangered species in the Russian structured market.

Led by Dresdner Kleinwort Wasserstein and Merrill Lynch, the transaction priced at 200 basis points over three-month Euribor, the upper rim of price guidance. Another, apparently dollar-denominated $200 million tranche, priced as well, but the results weren’t disclosed as of press time.

Moody’s rated the transaction Baa3′. MDM’s DPR business grew steadily from 2000 to 2004 and then suffered a slight reversal, occasioned by competition from rivals. Flows hit $5.2 billion in the year through September, suggesting that they will fall under 2005’s full-year figure of $9.8 million, unless the last quarter sees an atypical leap in numbers.

Most of the flows have been in dollars, but investors in the euro-denominated notes are hedged somewhat by triggers linked to the debt service coverage and exchange rate.

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