Before 01.04.2014 the Russian legislation stipulated the possibility of securitization of mortgage loans only. However, since the adoption of a so-called “Law on securitization” (Federal Law dated 21.12.2013 №379-FZ) it has been permitted to make securitization deals with any monetary claims, including those pledged with moveable assets as well as non-pledged ones.
The task: to raise funds from the capital market using the pool of car loans as a pledge for the bonds.
In general, the structure of the transaction is as follow.
«1» — Assignment agreement on car loans; «2» — Rating of the senior tranche bonds; «3» — Placement of the junior tranche bonds;
«4» — Placement of the senior tranche bonds; «5» — Incomings from debtors (borrowers of car loans); «6» — Service agent’s report (information about borrowers’ incomings);
«7» — Interest payment on senior tranche bonds; «8» — Variable interest payment on junior tranche bonds; «9» — Calculation agent’s report (information about expected incomings).
1. Drafting of term sheet. 2. Preparation of contractual documentation (contracts on assignment, collateral account, service and back-up service agreements as well as an agreement with a calculation agent etc.). 3. State registration of the issuance documentation with the Bank of Russia. 4. Interaction with a rating agency and issuance of a legal opinion.
The senior tranche bonds received investment level ratings by the main international rating agencies, which were significantly above the originator’s rating, and were successfully placed.