09 October 2007
Eskan RMBS Company issued BD30 million worth of conventional residential mortgage backed securities (RMBS) in Bahrain's capital markets representing the first RMBS Bonds to be issued in the country and potentially the first of its kind in the region to add depth to the kingdom's debt capital market.
Eskan RMBS Company has been incorporated as a wholly owned subsidiary of Eskan Bank for the purpose of issuing the RMBS backed by a pool of social mortgage loans distributed by Eskan Bank to eligible Bahraini citizens.
The RMBS, carrying maturities of three, five, seven and 10 years, were 1.74 times subscribed by local investors comprising financial institutions, insurance companies and Government-linked funds. These include BBK, the Pension Fund Commission, General Organisation for Social Insurance, National Bank of Bahrain, Ahli United Bank and SICO.
Interest on the RMBS will be paid semi annually based on a spread over the prevailing 6 months BIBOR.
The Central Bank of Bahrain has assigned a zero per cent risk weight to the bonds for capital adequacy purposes given the implicit support provided by the Ministry of Finance towards the transaction.
The transaction is the first securitisation approved by the Central Bank of Bahrain under Bahrain's Trust Law passed last year.
Eskan Bank is a specialised mortgage bank established in 1979 with an authorised capital of BD40 million and paid up capital of BD15 million, which acts as the financial arm of the Works and Housing ministry.
Since inception, the bank has been involved primarily in advancing housing loans to Bahraini nationals under the social housing programme, as approved annually by the Ministry of Works and Housing.
Ohad Trusts Corporate and Financial Services has been appointed as the Trustee for the transaction. Ohad is the sole company awarded with a trust licensed by the Central Bank of Bahrain.
The RMBS transaction would also form the catalyst for the creation and establishment of the National Mortgage Corporation (NMC) under the Mortgage Guarantee System, which is to be launched shortly.
The future securitisation transactions would be undertaken by the NMC to encourage the growth of the mortgage market and ensure that the Bahraini citizens benefit from the excess liquidity available in the capital markets.
The RMBS transaction is said to be a milestone in the growth of Bahrain's financial markets. It signals debt market players' readiness to accept structured finance products and their willingness to subscribe to longer dated debt instruments.
Eskan RMBS Company issued BD30 million worth of conventional residential mortgage backed securities (RMBS) in Bahrain's capital markets representing the first RMBS Bonds to be issued in the country and potentially the first of its kind in the region to add depth to the kingdom's debt capital market.
Eskan RMBS Company has been incorporated as a wholly owned subsidiary of Eskan Bank for the purpose of issuing the RMBS backed by a pool of social mortgage loans distributed by Eskan Bank to eligible Bahraini citizens.
The RMBS, carrying maturities of three, five, seven and 10 years, were 1.74 times subscribed by local investors comprising financial institutions, insurance companies and Government-linked funds. These include BBK, the Pension Fund Commission, General Organisation for Social Insurance, National Bank of Bahrain, Ahli United Bank and SICO.
Interest on the RMBS will be paid semi annually based on a spread over the prevailing 6 months BIBOR.
The Central Bank of Bahrain has assigned a zero per cent risk weight to the bonds for capital adequacy purposes given the implicit support provided by the Ministry of Finance towards the transaction.
The transaction is the first securitisation approved by the Central Bank of Bahrain under Bahrain's Trust Law passed last year.
Eskan Bank is a specialised mortgage bank established in 1979 with an authorised capital of BD40 million and paid up capital of BD15 million, which acts as the financial arm of the Works and Housing ministry.
Since inception, the bank has been involved primarily in advancing housing loans to Bahraini nationals under the social housing programme, as approved annually by the Ministry of Works and Housing.
Ohad Trusts Corporate and Financial Services has been appointed as the Trustee for the transaction. Ohad is the sole company awarded with a trust licensed by the Central Bank of Bahrain.
The RMBS transaction would also form the catalyst for the creation and establishment of the National Mortgage Corporation (NMC) under the Mortgage Guarantee System, which is to be launched shortly.
The future securitisation transactions would be undertaken by the NMC to encourage the growth of the mortgage market and ensure that the Bahraini citizens benefit from the excess liquidity available in the capital markets.
The RMBS transaction is said to be a milestone in the growth of Bahrain's financial markets. It signals debt market players' readiness to accept structured finance products and their willingness to subscribe to longer dated debt instruments.
© Bahrain Tribune 2007
