Tuesday, Apr 18, 2006
By Arif Sharif, Staff Reporter
Dubai: The International Finance Corp (IFC) will help complete the GCC's first mortgage-backed asset securitisation programme by providing partial guarantee to a Saudi Islamic bond issue, an official said yesterday.
Azmat Taufique, IFC's head of the Mena region, told reporters that IFC's part-guarantee for the bond, that is backed by the home loan portfolio Saudi Arabia's Kingdom Installment, Co will help lift it from junk status to investment grade.
He said the Islamic bond will be floated later this year, after appropriate changes to the Saudi mortgage law, and will be rated by international rating agency Moody's.
IFC will provide a guarantee equivalent to $30 million, or about five to 10 per cent of the bond's issue size, implying it could raise between $300 to $600 million. The bond will list in Bahrain.
The only previous securitisation in the Gulf region came last year from Emirates National Securitisation Corp (Ensec), but it put up cash collateral for the entire $350 million issue.
Some analysts say the Ensec issue, although a pioneering venture for the Gulf, was not a real securitisation because it was fully cash collateralised.
Home loan companies are now increasingly choosing to sell future income streams from their home loan portfolios through securitisation to raise more money to lend.
UAE's two top home loan firms, Amlak Finance and Tamweel, have already announced plans to float mortgage-backed bonds later this year.
Amlak plans to raise between $300 to $500 million and Tamweel, Dh1 billion.
Taufique said IFC the Saudi bond issue will precede the Amlak and Tamweel issues. He said the IFC will also be involved in another home loan securitisation programme in the UAE.
Gulf News 2006. All rights reserved.
