| 24 Jun 2007 |
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UAE getting ready for MBS boom
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June 2007
AmlakAmlak
, TamweelTamweel, Finance HouseFinance House and many others in the line-upUAE's mortgage-based securitisation (MBS) market is heating up with TamweelTamweel
also announcing that its first securitisation deal is in the offing. TamweelTamweel that claims to be the largest provider of real estate finance in the UAE, announced recently that it would do a $220 million asset-backed issuance of notes, in which the senior notes are expected to be assigned a rating of Aa2 by Moody's Investors Service and AA by Fitch Ratings Ltd. Recently, Amlak FinanceAmlak Finance
, the first home finance company in the UAE has said it will come to the market with a Dh1 billion asset-backed securitisation program. AmlakAmlak had stated that the company was to sell an asset backed securitisation to regional and international investors in a few weeks' time. However, Amlak FinanceAmlak Finance confirmed that though the project was underway, was still under study between AmlakAmlak and Emirates National Securitisation Corporpation (EnSec). Abu Dhabi-based Finance HouseFinance House also had mentioned during an interview with The Business Weekly that it would go to the market to securtise its mortgage loans through bilateral deals that will see units of $50 million being sold to institutional buyers. With huge number of property units being released to the market, the mortgage companies will naturally find it difficult to finance them straight from their kitties and securitisation will be a natural option before these companies.
The property market in the UAE continues to grow, with an estimate, in Dubai alone, of 69,000 units to be delivered in 2007 and some 139,000 units in 2008, assuming no delays, according to EFG-Hermes. "Moreover, the market is also getting matured and ripe for securitisation as more and more property units are getting completed and handed over to buyers," said a home finance expert.
Since securitisation helps banks remove risks from their books, many banks that have refrained from entering the property market due to their high risk aversion would be willing to generate mortgages and immediately unwind them from their balance sheets by either securitising the pools or by selling to institutions that are keen to buy these risks.
The ratings received by TamweelTamweel's asset-backed notes are expected to be the highest outstanding ratings assigned by international rating agencies for an asset portfolio originated by a UAE-based institution in the Middle East and North Africa region.
As a tiered, multi-class structure, this landmark issue, which was vetted by TamweelTamweel's sharia advisory board, will be one of the first securitisations of its type globally, according to a statement from the company.
Adel Al Shirawi, CEO of TamweelTamweel, said, 'We believe that such strong ratings from international rating agencies such as Moody's and Fitch are a clear indication that an originator like TamweelTamweel, can generate a high-quality portfolio that can meet world class standards. This is indeed a landmark occasion for TamweelTamweel - and equally for the UAE and the region."
has appointed Emirates National Securitisation Corporation (EnSec), a leading structured finance house based in Dubai, to structure the proposed transaction. Morgan Stanley & Company InternationalMorgan Stanley & Company International has been appointed as joint manager, joint book-runner and provider of hedging solutions; and Standard Chartered BankStandard Chartered Bank as joint manager, joint book-runner and provider of a liquidity facility for this proposed transaction. By Amit Chettupuzha
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