On March 30, 2007 Alfa-Bank, the largest Russian private bank, successfully closed the third securitization issue under its Diversified Payment Rights (DPR) Program established in March 2006. The offering consists of two series — a EUR 145 million Series 2007-A Notes and a USD 200 million Series 2007-B Notes, which were priced at par at Euribor +190bps (average life of 2.625 years) and US$ Libor +200 bps (average life of 3.125 years) respectively. Both secured floating rate Series of Notes have 5 year final maturities in March 2012. The Notes are issued via Alfa Diversified Payment Rights Finance Company  S. A., a SPV incorporated in Luxembourg, and are listed on the Irish Stock Exchange.

Unique and novel aspects of the third transaction include the following:

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 a BBB- rating by S&P. The Regulation 144A / Regulation S series of issuance continued to build on the success of last year’s inaugural issuance from Alfa-Bank DPR Program with more than 35 investors across both tranches, providing a solid book of both established and new interest in the asset class. The addition of the second rating also proved attractive to a number of US and European accounts that hitherto had been unable to participate in the program.

“Alfa-Bank is pleased to successfully close another pioneering transaction despite all the challenges of the current capital markets. We are proud to be the first bank in Russia to obtain an investment grade rating for a DPR deal from Standard & Poor’s. Diversified payment rights securitization has now provided Alfa-Bank funding of roughly $1.3bn equivalent in the one year since inauguration of the Program”, — said Andrew Baxter, Chief Financial Officer at Alfa-Bank.

“In response to some US investors’ requests to differentiate this transaction from the previous deals, the US tranche had for the first time, an interest only period in the deal, which pushed the weighted average life through the 3-year mark. This accounted for the 10bp differential between the US and Euro tranches.”, added Fraser Malcolm, Head of ABS Syndicate at Dresdner Kleinwort.

Mayer Brown Rowe & Maw acted as New York law legal counsel. Baker & McKenzie and White & Case acted as Russian legal counsel.