Alfa-Bank Completes the Second Issue under its Diversified Payment Rights Securitization Program
11 Dec 2006
On December 7, 2006 Alfa-Bank, one of Russia’s largest private banks, successfully closed the second securitization issue under its Diversified Payment Rights (DPR) Program established in March 2006. The offering consists of two tranches of a EUR 230 million Series 2006-B Notes and a USD 260 million Series 2006-C Notes, which were priced at par at Euribor +190bps and US$ Libor +190 bps respectively. Both secured floating rate Series of Notes have final maturities in December 2011 with an average life of 2,6 years. The Notes are issued via Alfa Diversified Payment Rights Finance Company S. A., an SPV incorporated in Luxembourg, and are listed on the Irish Stock Exchange.
The issuance represents the largest ever publicly placed unwrapped DPR issuance globally, and makes the DPR Program the largest one in the CIS Region.
Dresdner Kleinwort, the investment banking division of Dresdner Bank AG, and Merrill Lynch International (“Merrill Lynch”) acted as joint lead managers on the transaction.
Both Euro and Dollar denominated tranches have received a Baa3 rating by Moody’s Investors Service, and the Reg 144A / Reg S offering attracted interest from over 35 US and European domiciled accounts, most of which are new for the bank.
Andrew Baxter, Chief Financial Officer at Alfa-Bank, said: “This dual-currency transaction represents the largest debt issuance of Alfa-Bank to date. It is also the largest securitization transaction that has been done in Russia and the CIS up to date. By launching the DPR Securitization Program in March 2006, we created successful precedent and lifted transaction documentation to a new standard in the practice of Russian banks. We are pleased to see excellent results of the transaction and high level of investor demand to this deal. The offering contributes to further diversification of Alfa-Bank’s funding sources and enhances the Bank’s business growth.”
James Walters, Head of EEMEA Securitization at Dresdner Kleinwort said: “This is largest unwrapped DPR issuance globally to be done to date in the market. In the context of a year end market, this was a significant achievement by Alfa, both in terms of deal size and pricing. A large number of new investors to the DPR asset class invested in the deal, especially in the Euro tranche and whilst the headline spread levels achieved were wider than the inaugural transaction earlier in the year, the pricing differential achieved between the unsecured Alfa debt levels and the DPR Program actually improved this time round by around 20-30bps.”
“This represents yet another significant milestone of the investor base in the DPR product generally, and this deal specifically has gained Alfa-Bank a deeper, more diverse investor base from which Alfa will be able to attract funds in the future,” said Alex von Sponeck, Head of CEEMEA Debt Capital Markets at Merrill Lynch.
Mayer Brown Rowe & Maw acted as New York law legal counsel. Baker & McKenzie and White & Case acted as Russian legal counsel.
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