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RBC Daily: VTB 24, Vozrozhdenie Bank, Otkritie Bank and Transcapitalbank to issue mortgage-backed bonds

October 16, 2012 RBC Daily (translated by Cbonds)
The Russian ABS market is gradually recovering after the crisis. RBC Daily learned about several large-scale banks eyeing new mortgage-backed bonds. Bankers count on demand from foreign investors. Top managers of several banks told RBC Daily about upcoming mortgage-backed bond deals.

VTB 24 plans to securitise a mortgage portfolio bought from KIT Finance; securitisation is expected in late 2012 or early 2013. According to Vice-President of VTB 24 George Ter-Aristokesyants, the bank is poised to do up to 3 ABS deals in 2013, including one joint deal with VEB. The deal sizes have not been set yet.
Vozrozhdenie Bank mulls securitising its RUB 4bn portfolio before the end of the year. The bank did a deal of the same size in December 2011.

Otkritie Bank plans to do a RUB 5bn ABS deal in 2012, according to deputy CFO of the bank Alexander Dolzhich.

Transcapitalbank is also eyeing mortgage-backed bonds in Q4 2013. The issue size is expected at about RUB 5bn. "A RUB 4bn - RUB 4.5bn senior tranche will be refinanced by AHML and the remaining part by the bank itself," said Laszlo Czuka, deputy chairman of the management board at Transcapitalbank. He said the ABS deal will de used to refinance the current mortgage portfolio, which stood at RUB 8bn as of the end of September. The bank intends to boost it to RUB 10bn before the year end.

Market participants think that mortgage-backed bonds may be interesting not only to large government-related entities such as AHML or VEB, but to foreign investors as well. George Ter-Aristokesyants said that after the 2008 crisis banks have not been active in the ABS market as it was hard to find serious investors in the market willing to buy mortgage portfolios. "Western investors' risk appetite has faded, so they are not rushing to the Russian ABS market," he said. However, he added that the market is recovering now and in the coming year such investors will start coming to the market.

The only securitisation done this year in the Russian market was a RUB 6bn deal closed by VTB 24 in September.