In a new section in which Leasing Life examines important recent
deals, and the personalities behind them, Fred
Crawley and Jason T Hesse look at two
recent securitisations that have hit the equipment finance
market
Piraeus Leasing
Go deeper with GlobalData
Details of deal:
Greek banking group Piraeus has issued notes worth €540 million in
leasing receivables from subsidiary Piraeus Leasing, as collateral
for low-interest European Central Bank (ECB) refinancing.
Completed in recent weeks, the deal represents
the latest in a series of securitisations originating from Piraeus
group subsidiaries, which have totalled €5.1 billion over the year.
The others, involving consumer loans and other forms of commercial
lending besides leasing, have also been used as security on ECB
loans at an interest rate of 1 percent.
What was traded:
The receivables bundled together by Piraeus Leasing for the deal
were associated with commercial real estate, heavy commercial
vehicles and plant assets, with some medical and office equipment
included.
All contracts were for equipment assets leased
to Greek customers. Class A notes, representing 51 percent of the
total securitised portfolio, were rated AAA by Moody’s.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataExternal advisers:
UBS Investment Bank acted as arranger, with notes issued through
the UK-based special purpose vehicle GAIA Lease Plc. Legal advice
was provided by Athens-based boutique practice Moratis–Passas and
White & Case LLP in the UK.
Why now: Using
securitised receivables as collateral for ECB lending is common
practice in Greek, Italian and Spanish banking. In Greece,
securitisations have been relatively common for the last five
years, although the inclusion of leasing receivables in such deals
is new this year.
So far this year in the Greek market, Bank of
Cyprus and EFG Eurobank have carried out similar deals, while Alpha
Bank is rumoured to be putting one together at present.
Although the ECB stipulated in May that it
would only accept collateral rated AAA on lending to banks, thus
increasing the systems burden of preparing an issue, its interest
rate remains low enough to make this an attractive way for Greek
banks to source funding.
At present, this option is only available to
leasing companies with parent banks that can trade the securitised
lease packages. The ECB will not lend to independent leasing
companies.
Behind the people involved: Within
Piraeus Leasing, MD Yiannis Mavrelos (pictured) oversaw work from
the lessor’s IT and risk management teams in assembling the
package, while Fouskas Costas of Piraeus Bank’s treasury function,
co-ordinated the transaction from the parent side. Costas, the
director of asset & liabilities management section of the bank,
has been working for Piraeus Bank since 1999. His previous job saw
him oversee the treasury of NatWest Greece. He holds a degree in
mathematics from Athens University, and an MBA from Manchester
Business School.
Volkswagen Financial
Services
Details of deal:
Asset-backed securitisation (ABS) of 39,000 leasing contract
receivables by Volkswagen Financial Services (VWFS). The
portfolio’s average term length is 1.4 years, and all of the leases
relate to VWFS’ German market.
Value: €546.5 million, split in two
tranches: €500 million of Tranche A notes, rated AAA by S&P and
Fitch; and €19.1 million of Class B notes, rated A+ by the credit
rating agencies. The Class A notes were priced at 1-month Euribor
plus 110bps, and the Class B notes were priced at 250bps.
Why now: According
to Stefan Rolf, head of the ABS team at VWFS, who has been involved
in over 20 securitisations at VWFS thus far, market demand was the
main reason for the deal, as VWFS has an “ample surplus” of cash,
and is funded well into 2010.
VWFS has been issuing ABS transactions for
some time now and, despite the freeze of the ABS markets, investors
have come to expect regular opportunities for them to invest in
VWFS leasing receivables.
Demand for the transaction certainly was
strong, with the Class A tranche being oversubscribed by 4.7 times,
and the Class B tranche by 3.4 times. In total, 63 investors from
17 countries signed up to the ABS programme, the majority of which
are repeat investors.
Law firms: Baker &
McKenzie
Background: VWFS
issued Europe’s last asset-backed securitisation in September 2008,
before the fall of Lehman Brothers. Last month’s €546.5 million
securitisation has now reopened a market which had frozen over.
The transaction, co-arranged by VWFS and
WestLB, was marketed with JP Morgan in a six-day road show in which
the companies met over 50 investors in London, Paris, Frankfurt,
Munich and Amsterdam.
“The mood was very positive – we clearly had
the impression that people were willing to look at new
investments,” said Rolf.
According to Rolf, investors have become much
better educated than before the credit crisis, and have turned to
running their own analysis, rather than only relying on
ratings.
Jan-Peter Hülbert, executive director at
WestLB, who co-arranged the transaction and has already structured
previous VWFS ABS transactions, also noticed the trend: “Investors
want to go deeper in the analysis, that much is clear. Nearly every
investor said it was a good thing for VWFS to come into the market
– the market was right and VWFS was the right originator to do the
deal.”
Hülbert said the market can expect more ABS
transactions going forward.
“VWFS are frequent issuers – in the past they
have come to the market two, three or four times a year. We would
expect them to do so again in the future,” Hülbert said.
Rolf added: “People were basically waiting for
fresh paper with a high running coupon, and this is just what
investors needed: a plain vanilla transaction with a short weighted
average life and strong performance.”
Behind the people involved: Rolf,
who reports to Bernd Bode, head of treasury of VWFS, was previously
general manager for treasury in the Asia-Pacific region for VWFS
prior to taking up his current position four years ago. Aged 37, he
is responsible for six people in his ABS structuring group, and a
further five in ABS operations which is responsible for monthly
reporting and related areas.
