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SECURITISATION NEWS AND DEVELOPMENTS
[This page lists news and developments in International securitisation markets - please do visit this page regularly as it is updated almost on a daily basis.]
Read on for chronological listing of events, most recent on top:
Insurance regulators review securitization developments
US insurance regulators recently reviewed the rapid pace of developments in insurance securitization. In their recent quarterly meeting in Chicago, the National Association of Insurance Commissioners reviewed one remarkable development that took place recently: index-based derivatives to hedge property/casualty risks.
Ailing Japanese truck maker Nissan Diesel Motor Co. will sell the land of its Ageo plant in Saitama Prefecture under sale-and-lease-back-cum-securitization deal, and thereby raise 25.5 billion yen. The deal is part of a business restructuring plan in which four of the company's main banks, including Industrial Bank of Japan are participating.
Nissan Diesel will use a profit of 22.1 billion yen from the sale to help reduce its group's 500 billion yen in interest-bearing liabilities.
The securitization deal will be preceded by a sale and lease-back - the company will transfer the 400,000-sq.-meter Ageo plant plot and an adjacent 32,000-sq.-meter unused land to a trust vehicle set up by Yasuda Trust & Banking Co. for 25.5 billion yen. Yasuda Trust & Banking will issue securities backed by beneficiary rights to the trust through a special-purpose company. The plant will be taken back on lease by Nissan Diesel which will continue to produce trucks at the Ageo plant.
Links A similar structure was recently used by NEC, Japan - click here for the news item.
Securitization is a buzzword in Italy
Italian securitization players are trying to use the new securitization law to the hilt. There have been several securitization deals over the past few months, and three deals in past 2 weeks.
The first notable deal is a securitization of a single-obligor sale and leaseback transaction. The obligor, Impregilo, has sold fixed assets to LeasingRoma, which in turn has leased the assets back to the obligor. The lease rentals out of this transaction have been securitized. This unrated Euro 40 million deal has been credit enhanced by a credit line of Euro 7.5 million by Banca di Roma, which is also the lead arranger of the deal. Essentially, the transaction represents securitization of fixed asset acquisition by a single obligor. The leasing company in question is owned by Banca di Roma. This will be the first securitization of a sale and leaseback deal under the 1999 Italian law.
In the second deal, Euro 36 million worth mortgage backed securities have been issued by Cassa di Risparmio di Chieti. The transaction is credit-enhanced by subordinated notes. Moody's have rated the senior notes Aaa.
In the third deal, Euro 110 million worth floating rate notes 110 EURO million, broken into Class A 20 million, and subordinated Class 90 millions have been issued by Cassa di Risparmio di Chieti. The collateral here consists of non-performing loans, which is evident in the massive subordination level. It is interesting to note that the senior class has been rated Aa2 by Moody's.
In our country profile on Italy, we have covered some recent market developments in Italy - click here to access.
HSBC Bank Plc claimed in a press release that its maiden CLO issue of USD 850 million scheduled to be launched in April 2000 will use the US-style master trust structure for the first time in UK. he CLO will be sold to professional investors by a special purpose vehicle, Clover Funding No. 1 plc ("Clover"). Clover will issue the CLO in the form of different classes of Floating Rate Notes due 2005 and will seek a listing for the Floating Rate Notes on the London Stock Exchange. HSBC Bank plc anticipates that the CLO will be priced and subsequently closed prior to the end of April 2000, subject to market conditions.
It is expected that the Class A notes, which will represent at least 90 per cent of the CLO, will be rated AAA by Standard & Poor's and Aaa by Moody's. It is intended that the mezzanine classes of notes will have lower ratings and the most junior class of notes will be unrated.
A couple of mega MBS deals were announced this week in the Australian MBS market. St George Bank would launch $US364.5 million Crusade mortgage backed securities issue in the Australian domestic market. The issue will be lead managed by Deutsche Bank AG, with St George Bank as the sole Co-Manager. The issues includes a fixed rate bullet payment tranche on 15th October, 2002, and a floating rate tranche with an expected average life of 6.5 years. Both have been rated AAA by Standard & Poor's and Fitch IBCA.
Another mega deal, a global issuance, was launched by the Commonwealth Bank of Australia Ltd (CBA). Issued through the bank's special purpose vehicle, Medallion Trust, the deal includes a Class A1 of USD 955 million to be issued into the US and Euro markets. The Class A1 notes will be registered with the US SEC and listed on the London Stock Exchange. The issue also includes an A2 tranche and a B tranche.
Standard & Poor's has assigned preliminary ratings to the issues of AAA for Class A1 and A2, and AA for Class B.
A study sponsored jointly by the Investment Property Forum, the British Property Federation, the Royal Institution of Chartered Surveyors and the Corporation of London has stressed the need to promote property securitization in the UK, if necessary, by providing tax sops. The paper, titled Property Securitisation in the UK, concludes that "securitisation - trading property assets like tradeable shares - would cut transaction costs and boost trading, thus attracting capital back to property and improving the efficiency of the market and economy as a whole".
The study stresses the capital allocation in the property sector has suffered a setback due to double taxation of income arising on equity contribution. If investments are allowed to come in the form of tax efficient securitization conduits, it would duplicity of taxation, and invite capital markets to invest directly into the property segment.
If securitization were to be compared to direct property investment, then, to the extent that the income accruing to investors in such case might be a bond interest or a capital gain, securitization might be marginally tax-negative for the revenue. However, if securitization were to be compared with investing in the equity of a property company, it is a highly efficient tool as equities are subject to double taxation. [Based on a report in Financial Times, 17th March]
The largest MBS deal to be originated from Argentina has been backed by political risk cover provided by Zurich US. The USD 156 million bond issue is based on mortgage loans originated by Banco Hipotecario SA (BH). BH is the largest mortgage lender in Argentina and has been the pioneer in the field of mortgage securitization. The transaction, lead managed by Bear Sterns and Co. is supposed to be the largest mortgage securitization deal from the whole of Latin America.
This is also said to be the first instance of use of political risk cover for a mortgage-backed security. Political risk covers have earlier been used for future flows receivables, where political intervention has a direct bearing on the servicing of investors. In the present case, Zurich US has provided risk cover to investors against currency incovertibility and transfer owing to political reasons. The cover has enabled the senior notes to be rated A+, the highest ever rating for a Latin American MBS.
For details, refer to Zurich US Website.
To promote the fast-growing business of securitization in Asia and the Pacific, securitization professionals have constituted a body called the Asian Securitization Forum. The Forum has been set up under a not-for-profit company registered in India.
The basic objective of the Forum is to provide a platform for interaction, sharing of information and propagation of securitization activity. The Forum will also lobby with regulators in different countries in the region to foster a congenial environment for securitization activity.
Headquartered in Mumbai, India, the Forum will have a region-wide presence.
Vinod Kothari, a leading securitization consultant and trainer has taken over as the Executive Director of the Forum. A Governing Body consisting of eminent securitization professionals from all over the region will be constituted soon.
Securitization is growing fast in Asia. The rate of growth in Japan has been spectacular, but in other Asian and Pacific countries, it is still facing a number of impediments. The Forum will use its collective strength to share information, focus opinion to remove environmental problems, standardize procedures, etc.
A full featured website of the Forum has also been launched at
Korea French Banking Corp (Sogeko) has recently issued USD 81 million asset-backed securities, based on USD 40 million worth of equipment leases and term loans. Of the issuance, International Finance Corp will purchase USD 20 million worth securities, while the remaining amount will be placed in the capital market in form of floating rate notes.
The transaction is the first cross border securitization of Korean domestic assets. The deal was arranged and managed by Societe Generale Asia Ltd.
The trustee to look after the SPV will be the Seoul branch of Chase Manhattan Corp.
Scor, the French reinsurer, which is engaged in providing reinsurance coverage for Japanese and US earthquake and European windstorm risks, has mulled a USD 200 million cat bonds issue, which is believed to be the largest out of Europe so far. The cat bonds will provide the reinsurer with a retrocession cover for next 3 years.
Following the withdrawal of Australian reinsurers who provided retrocession, tapping the capital markets was considered as a good option. The price the reinsurance company pays for the cover is comparable with cover in the reinsurance market. Scor may further extend its use of catastrophe bonds, or invest in offerings by other insurers or reinsurers.
The cat bonds market, a device for putting reinsurance cover in capital markets in form of either cat bonds or cat-E-puts, continues to grow. Around 40 catastrophe bonds have been issued, providing capacity of about Dollars 3.5bn, with the US being the main area of activity. Scor's bonds were placed through Atlas Re, a reinsurer set up in Ireland for the purpose of the issue.
Links Our focused page on insurance securitization provides a large number of links on cat bonds, besides generic description. Click here.
Financial Security Assurance (FSA), one of the leading credit enhancers in securitization deals, is being taken over by Dexia Group of Paris. FSA is engaged in providing insurance enhancement to bond issues, particularly from emerging markets, and has built a strong presence in securitization transactions.
FSA ranks in bond insurance, next to Ambac Assurance Corp., MBIA Insurance Corp., and Financial Guaranty Insurance Co., a unit of General Electric. The market share of FSA was approximately 23%.
Dexia, the acquirer, a USD 230 billion group, is engaged in asset banking and municipal credit. Dexia will pay USD 2.6 billion for the takeover.
To an outsider looking it, it seems like jungle games. Credit Suisse (CSFB), which recently lost a dozen of its securitization team members, has quickly reacted. It has lured 10 persons from Prudential Securities to join it. The team it is poaching is led by Joe Donovan and Greg Richter, who are joining as managing directors and co-heads of the firm's US asset finance business. Donovan was head of asset finance at Prudential and Richter was head of trading and syndicate for all structured products there.
A later report in Financial Times of 16th March, citing Bloomberg, says that Prudential has run to the Court to seek injunction against CSFB and the individuals who left for having violated their job contracts. The suit filed by Prudential in New York State Supreme Court seeks to restrain Joe Donovan from soliciting further members of Prudential team. The application is likely to come for hearing on 24th March.
Greenspan recently spoke before a meeting of community banker and justified the revised risk-based capital adequacy requirements for small banks in securitization. Referring to the revised capital adequacy framework suggested by the BIS, Greenspan said he would not apply those complex standards to small community banks as doing so would be impractical and unnecessary. However, the Fed will continue to take a more sophisticated supervisory approach to small institutions engaging in more complex transactions such as securitization and investments in residual interest-only strips, he said.
Greenspan was addressing the Independent Community Bankers of America's convention in San Antonio, on March 8.
Greenspan's remarks become relevant in light of the recent regulatory exercise of re-drafting the norms for banks getting into securitization activities. Click here for the news item relating to the draft guidelines.
Mettle, a specialised finance house based in South Africa, has recently implemented a R430 million securitisation of the Unibank Group Limited ("Unibank"). The transaction represents securitization of micro loans originated by Unibank.
Micro loans are small loans extended to businesses which are not able to attain traditional funding due to lack of collateral or presentable financial statements. Thanks to Government promotion, micro finance has picked up significantly in South Africa, both among the banks and specialised finance companies. Unibank has been in micro finance since 1986.
The transaction, the first case of micro loan securitization in SA, will help Unibank achieve liquidity. The transaction is comprised of R. 300 million worth of senior notes rated AA, and the balance in form of a subordinated loan granted by Mettle, the arranger in the present case.
Besides, Unibank will also be creating a cash reserve of approx. R. 13 million. The transaction is to revolve for a certain period in that the SPV will be allowed to buy fresh micro loans instead of amoritising the principal.
Mettle has been in securitization business and has structured several transactions in the past. We have carried news report on Mettle - click here.
Links See our country profile on South Africa - click here.
Japan Rating and Investment Information (R&I) sees securitization taking off in Asia outside of Japan. R&I says: "A securitization market in Asian markets outside Japan is starting to emerge. This year will see a further expansion, as well as diversification and deepening of the market. The background factors are that banks are moving to boost their BIS ratios and improve their asset quality, while companies are seeking to diversify fund sources. Securitization can help banks and companies to strengthen the balance sheet and create a more flexible economic structure and effective financial system. However, the development of a securitization market will require comprehensive reforms of the legal, tax, and accounting systems, and the speed of development may vary according to the country. R&I believes Korea and Hong Kong are in a comparatively strong position, while the rest of the countries may take some time to build up an adequate market infrastructure."
Securitisation will have multifarious impact on Asian capital markets. While it would have positive impact on ratings of corporates, governments and banks, banks will have leaner balance sheets. Securitization may also improve bonds markets which will be critical to reduce dependence on traditional funding sources.
The report prepared by Makoto Ikeya, Chief Analyst, goes into questions of cost-effectiveness of securitization. It admits that structures as well as the produce being new, it involves higher cost and there is a scope for reducing costs over time. "Moreover, finding investors for the subordinated part of securitization issues is difficult in Asia, even in Japan. So far, only a small group of investors such as distress funds in U.S. have made such investment in some cases", thereby requiring the originator to retain the subordinated part, reflecting upon the cost.
Full text of the report is available at www.r-i.co.jp
In recent months, there have been a number of office property securitizations in Japan. On the news page on this site, we have carried some of these reports - click here for a report on supermarket chain securitization and click here for NEC's multi-billion office property securitisation.
Duff and Phelps (DCR) explains the increased activity in Japanese CMBS thus: "Property owners’ pressing need to refinance, coupled with the stabilizing supply/ demand fundamentals in Japan’s office markets (primarily the prime, Class A market in the metropolitan areas) has created much of the activity in the issuance of commercial mortgage-backed securities (CMBS). On the heels of lenders’ general unwillingness to support this sector after the "bubble" burst in 1991, the CMBS market also provides a much-needed alternative source of financing for the real estate sector."
Many of the Japanese CMBS transactions have been single-tenant properties. In other words, the cashflows from the property depend on the financial strength of the tenant. Quite a number of these transactions have been devised as sale and leasebacks where tenancy has been created on a previously owned building, for example, in the NEC transaction reported before. DCR comments about such transactions as follows: "However, most of these single/majority tenants also tend to be the owners attempting to securitize the buildings to bolster their balance sheets, and would typically (though not necessarily) have a weak financial position. Additionally, the lease structure may not be "bondable", in which case the rating of the tenant is used to determine the normalized vacancy rate and leasing costs (an investment-grade tenant implies a low vacancy rate compared to a higher vacancy rate for a sub-investment-grade tenant)."
DCR comments: Given the need of several non-real estate corporates to restructure their balance sheets (and focus on core businesses) and consequently the motivation to securitize properties, DCR expects several sale/lease-back transactions to be completed in the future (in line with the trend in the past). In addition, CMBS transactions backed by mortgages secured by office properties are also expected to provide an impetus to the further development of the CMBS market. Simultaneously, an increasing domestic investor appetite for such products should also help in the growth of the market.
Links: For more on securitization in Japan, click here. For more on securitization of commercial mortgages, click here.
International rating agencies Fitch IBCA (Fitch) and and Duff & Phelps Credit Rating Co. (DCR) announced on 7th March that they have entered into a definitive merger agreement pursuant to which a subsidiary of Fitch IBCA will acquire Duff & Phelps Credit Rating Co. for $100 per share, for a total price of $528 million. Fitch is a subsidiary of FIMALAC, S.A., a diversified French operating company. The acquisition will be completed through a cash tender offer, followed by a cash merger.
The merger will create a rating company with combined annual revenues of $260 million and a staff of 1,100. Both the companies had strong capabilities in rating securitization products, with Fitch's key strengths being in the U.S. securitization markets, while DCR was stronger in international markets. The merger will allow the two to benefit by synergies, besides being stronger in both geographical presence and manpower. The two together will be able to accelerate investment in technology and Internet delivery needed to bring credit research and ratings to global markets.
Marc de Lacharrière, Chairman of Fitch, will become chairman of the new entity and has designated Robin Monro-Davies as CEO and Stephen W. Joynt as President and COO. Paul McCarthy, Chairman and CEO, and Philip Maffei, President, of Duff & Phelps will become directors of the new company. The new company will maintain major operations in London, New York, and Chicago.
When the French are at it, it has to be something queer, something bold. Proving that the recent securitization of champagne bottles was not the last tango in Paris, French textiles producer Chargeurs SA announced plans to raise some Euro 300 million by securitizing stocks of wool. Reports in La Tribune said the company intended to convert a physical asset into a financial product.
The methodology of converting physical or operating assets into financial products is a new innovation in the world of securitization. Essentially partaking the legal (and accounting) character of a loan transaction, the methodology involves putting the physical stocks into the pledge of an SPV, and the SPV in turn funding itself by issue of securities to investors. The transaction is revolving in character, as the stocks sell and the proceeds are released to buy fresh stocks from the producer. The investors have a far stronger security interest than in a conventional commercial paper since the stocks are in the physical possession of the SPV which holds security interest in the stock.
Standard and Poor's (S&P) recently put up an interesting study that tracks the developments and changes in the 15 years' history of asset-backed securitization in the USA. Written by Dr. Joseph Hu, it is interesting to see how the ABS market has matured over time. Here are some of these trends
Full text of the report is available on Standard and Poor's website : click http://www.standardandpoors.com/ratings/structuredfinance/index.htm
Tohmatsu rated best securitization accounting firm
US-based international accounting firm Deloitte Touche Tohmatsu (DTT) was voted the best securitization accounting firm in North America as well as Europe, and runner up in Asia-Pacific. The recognition was based on votes collected by trade journal International Securitisation Report.
DTT was won these laurels for the second time in succession. Last year, it was adjudged the best firm for Europe and no awards were declared for USA.
Deloitte Touche Tohmatsu is a provider of global securitization services such as: due diligence, cash flow modeling, collateral stratification analysis, accounting and tax advice, surveillance, technology support, and financial statement audits. The group’s practitioners have worked on over 7,000 securitization transactions in over 20 countries. In anticipation of increased securitization activity throughout the world, Deloitte has established a network of seasoned professionals in 41 countries to meet the specific needs and expectations of its clients.
Vinod Kothari comments: Congratulations DTT! This site has to express sincere thanks to DTT, Marty Rosenblatt in particular, for continuing to contribute to this site. Several articles by Marty Rosenblatt and Sunil Gangwani appear on the articles section of this site, which, as I know from visitors' comments, have been very well read.
Related news : Chase was voted by the same trade journal as the best trustee for securitization - see news item below.
This was the news of the weak: Deutsche Bank is hiring a dozen members of Credit Suisse First Boston's (CSFB) senior asset-backed securitisation team in New York. Eight of the defectors, led by Jorge Calderon and Philip Weingord, have already resigned and the rest are expected to do so soon.
Financial Times 3rd March reported that this is most likely to be viewed as a revenge for CSFB poaching Deutsche's technology team a couple of years ago. The move is certainly a major blow to CSFB's securitization operations as it currently is Numero Uno in North America with about 14.5% of the markett. Deutsche, on the other hand, was at the 16th place. Deutsche is, however, number one in Europe where CSFB is at number 9.
Deutsche has announced plans to continue hiring.
At the same time, in CSFB, the exodus would probably continue. Some market commentators regarded this as the most significant departure where almost all the aspects of an investment banker's business leave in collusion. Some commentators tried to link the migration to bonus-related problems in CSFB.
Your comments please! As an industry professional, what are your views on this move? What ripples will it make? Is it likely to result into a poaching game when pay packets of securitization professionals will soar to crazy heights? Please post your views at the Discussion Forum.
The Chase Manhattan Bank's Capital Markets Fiduciary Services division (CMFS) has received practitioners' acclaim as the best securitization trustee. The group has been voted as the `Best Trustee for North America', `Best Trustee for Europe' and `Runner-up Best Trustee for Asia Pacific' for 1999 by the International Securitisation Report.
With offices in 31 major cities across the globe, CMFS is a leading provider of corporate, municipal, and structured debt services to issuers, intermediaries and investors worldwide. The division has served the corporate and municipal markets for over 100 years and today provides traditional securities processing services, including trustee and agency services for corporations, municipalities and other issuers, as well as support services for a wide range of capital markets instruments. Product offerings include an array of services for structured finance products, including collateral agency, compliance testing, and analytics for collateralized bond and loan obligations. The global leader in its field, CMFS provides trust services for more than $3 trillion in principal debt.
Banco Hipotecaro, Argentina's largest bank is proposing to team up with International Financial Corporation (IFC) to create a body for secondary mortgage markets in the country. The body, on the model of Fannie Mae, USA, is to be called Corporacion Financiera Hipotecaria. A real estate developer IRSA will also be joining the venture.
Fannie Mae in USA purchases mortgage loans originated by housing financiers and packages the same in fixed income securities, providing its own credit enhancement. Corporacion Financiera Hipotecaria will be capitalised with $50 million, to be provided 20% by IFC and the balance by the local partners. The company will be able to hold more than $400 million in assets. The company would operate on spreads of about 3% to 4%, by buying mortgages yielding 11% to 12%. IFC participation will ensure that the securities created by the company will have appeal to international investors too.
Indian Finance Minister Yashwant Sinha proposes to start securitization of small business loans. This is his proposal as a part of his Budget speech for year 2000-1, presented on 29th Feb.
In a slew of measures aimed at promoting small business finance, Minister Sinha proposed that the Small Industries Development Bank of India (SIDBI) will guarantee loans originated by commercial banks. These loans, upto a limit of Rs. 1 million, will be securitised with the credit enhancement provided by SIDBI.
The measure, if implemented, will be a welcome measure both to promote securitization markets in India as also to provide much-needed funding support to small industries, which constitute a bulk of India's industrial base.
A recent Bloomberg report says that asset securitization is getting
more popular as a means of selling property in Singapore, and is likely
to give a boost to the fledgling bond market. Southeast Asia's largest
bank, the Development Bank of Singapore has dominated the market here,
having arranged about S$1.8 billion ($1.1 billion) worth of asset securitization
transactions. The largest issue to be offered in the country is S$878
million ($520 million) worth of corporate bonds for DBS Land's Six Battery
Road office building.
Links: For more on securitization in Singapore, click here.
Japan's Ministry of Finance intends to obtain revenue worth 5 billion to 6 billion yen from national land sales under a securitization scheme. Later, this experience will be repeated to raise an expected amount of 220 billion yen from capital markets.
Reports in JIJI said the government will sell national land tracts to special-purpose companies, which in turn will then sell securities backed by relevant land plots to investors to raise funds for the construction of facilities such as condominiums and office buildings on the land.
Since the passage of the securitization law (SPC law) in Japan in Sept., 1998, a number of SPCs have already been registered. 34 SPCs have registered securities worth 1781 billion yen.
Links For more on securitization in Japan, see our country page - click here.
The 4 US bank regulatory agencies: Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and Office of Thrift Supervision on 17th Feb. jointly issued a press release with which a draft of new rules to regulate securitization activities of banks were published.
The proposal by the agencies is purportedly intended to produce more consistent capital treatment for credit risks associated with exposures arising from securitization transactions. It would amend the risk-based capital requirements for asset-backed securities as well as recourse obligations and direct credit substitutes.
Public comment is requested by May 26, 2000.
In securitizations, assets such as residential and commercial mortgages, credit-card receivables and automobile loans are pooled and reconstituted into securities. Securitizations typically carve up the credit risks from underlying assets and redistribute them to different parties. Sellers of assets into a securitization may retain part of the risk of credit loss through recourse arrangements. Sellers also may arrange for a third party, such as a banking organization, to accept some of the credit risk through guarantees, referred to as direct credit substitutes.
The proposed revisions would:
The agencies had earlier published the draft proposals in November 1997 [ See news report on this site - click here] . The revised guidelines incorporate the suggestions received by the agencies. In fact, the decision to relate the retained interests to the rating of the instrument is also echoed in a June 1999 proposal by the Basel Committee on Banking Supervision, which is to be finalised soon after March this year.
Do you have any comments on the Draft regulations? Please post them on the Discussion forum or write to me.
Securitisation is still small business in South Africa, deterred by lack of understanding among the investors. But players in the business are reporting smart activity and profits in the recent past. Mettle, a specialised finance house, reported securitization volume of Rand 1.2 billion during past 14 months, says a report by South African Press Association.
To get an idea of the type of transactions being securitized, one of the recent transactions was the R430 million securitisation of a section of Unibanks microlending book, which was accorded an AA rating by Duff & Phelps and Fitch IBCA. In another recent deal, worth R140 million, Mettle securitised the debtors book of a South African company operating in Botswana. The securities were picked in part by local Botswana banks.
Mettle is currently negotiating securitisation deals in other developing countries, in Africa and in the Far East.
Links: Do visit our country page on South Africa which gives more details and links.
Accounting for retained interests by banks in the US, adopting FAS 125, continues to ensnare
Recommendations from BIS, still under consultative state, suggest that if the retained interest is either unrated or rated below B+, it should be completely deducted from the bank's capital. This, however, is regulatory accounting and may not be followed in the general financial statements of the bank.US banks. Recent probes by US bank regulators into the values banks have put to retained residuary interests in securitized loans have scared many, who are now writing off huge amounts on their revenue statements. Recently regulators have been chasing banks to shore up their Tier I capital as the value of retained interests. The concerns have been flared up by several instances of bank failures in the past - see stories on this site linked here.
A report in American Banker 14th Feb says that Charleston-based City Holding Co. wrote off $9.2 million in the fourth quarter against a revision of residual assets' cash-flow expectations.
This is not the only case. Community West Bancshares of Goleta, Calif., recently said it plans to write off $8 million and that it expects to report a 1999 loss of $3.8 million. Life Financial Corp. of Riverside, Calif., said on Feb. 1 that it swallowed a one-time, after-tax loss of $16.8 million in 1999 when it sold the residual assets and mortgage servicing rights remaining from mortgage-backed securities it had issued. BYL Bancorp in Orange, Calif., said it intends to leave the securitization business to escape regulatory pressures and possible new capital requirements
Links: This site has rich resources on accounting for securitization transactions - see articles by Martin Rosenblatt and others - click here. The site has reported several sensational news items on banks' accounting - click on the news item below which would carry you to other interesting links.
Korean company Korea Asset Management Corp. (KAMCO) will securitize doubtful claims on Korean companies. KAMCO wants to become a world-class investment company by building expertise on handling distressed assets.
According to the company, the value of the world's total distressed assets is estimated at $4 trillion, including $500 billion in China, $900 billion in Japan and $1.8 trillion in Latin America and Eastern Europe. Only if 10% of this business could be handled, it would mean USD 4 billion in commission revenue.
For a starter, the company intends to buy claims of foreign banks on Daewoo group and securitize the same. According to a report in The Korea Herald 12 Feb, the foreign banks who have receivables against Daewoo will sell the same to domestic banks, from where Kamco will pick them up. Finally these claims will be securitised to be sold to local and international investors.
Links: For securitization in Korea in general, click here.
Though insurance securitization market developed to transfer catastrophe risks, it is today finding new applications and is growing beyond the catastrophe segment. Experts echoed this view at Hawksmere Alternative Risk Transfer and Financing Conference in London on Feb. 10. Experts predicted more use of different types of securitizations that provide contingent equity. New applications might include something like risks on extended warranty benefits by businesses.
On the possibility of capital markets completing eroding reinsurance markets, Bryan Joseph, an actuary with Price Waterhouse Coopers, said : "Reinsurance has quite a lot of advantages, and I don't think it will be replaced by capital markets products in its entirety. Securitization is an additive tool and an additive market, but so long as you can place your traditional reinsurance covers for less than you think that you should, people will stay in that market".
Links on insurance securitization See our devoted page - click here. This page gives several links on insurance securitization.
Another risk securitization instrument is weather risk securitization - this page too gives lot of links.
The Inland Revenue Service (IRS) published last week draft regulations for Financial Assets (FASITs). FASITs are conduits to enable securitization of financial assets other than real estate receivables. The enabling legal provisions for FASITs were created some 4 years ago. FASITs were a non-starter all these years because the machinery provisions were yet to be created, which is what is being done now.
FASITs are investment conduits to invest in non-mortgage securitization transactions, like Real estate investment Trusts (REITs) invest in real estate credits. The purpose of FASIT law is to allow tax exemption to FASITs that satisfy the conditions set out in the IRS law.The proposed rules from IRS also contain an accounting angle - in that they provide for determination of gains on transfer of assets to a FASIT.
FASITs are generally able to hold only cash and cash equivalents, debt instruments (and the right to acquire such instruments), foreclosure property, interest and currency hedges (and rights to acquire such instruments) guarantees, regular interests in other FASITs, and regular interests in REMICs. However, in line with the market practices, the proposed regulations stipulate that a FASIT may hold fixed-rate debt instruments, specified floating-rate debt instruments, inflation-indexed debt instruments and credit card receivables. Additionally, FASITs may hold beneficial interests in, or coupon and principal strips created from, these types of instruments. The proposed regulations appear to exclude as a permissible asset, however, loans with contingent payments that were stripped outside of the pool.
The text of the proposed regulations can be downloaded from http://www.irs.ustreas.gov/prod/tax_regs/txts/irs-regs.htm
"The techniques of securitization, developed for shifting loans off your balance sheet or refinancing consumer lending, are being applied to a growing variety of tasks. The experts are marketing their box of tricks to anyone with a predictable cashflow. ", says an article in Feb. 2000 issue of Euromoney . The article reviews the development of securitization in USA and Europe and sees new innovative applications.
The article compares the US securitization market with that of Europe. The US market has been commoditised over years of practice - the issuer motivations are clear and the behavior of various asset classes is clearly understood by the investors. Mortgages, credit cards, auto loans and corporate loans are the staple diet of the US market. By contract, European market is yet to create a regularity of issuance. Europe is not primitive, but eclectic. " Investment bankers struggling for years with the absence of standard legal frameworks for securitization have developed a wide range of techniques, and without a constant flow of deals in the main categories they have sought out new and surprising places for one-off, customized securitizations", says the author.
While Europe might have originated interesting transactions as the Italian government receivables or the Rugby world-cup telecasting rights, Europeans transactions lack standardisation. Standardisation is necessary to provide investors liquidity: they can walk out of one bond and get into another without having to re-analyze the entire transaction.
The European mortgage finance product, Pfandbriefe is a prominent example of a standard mortgage financing alternative. France provided another alternative - obligations fonciers.
Rating agency Standard and Poor's (S&P)recently reviewed the 1999 US asset-backed market and projected the developments in year 2000. According to the agency, total public ABS issuance, excluding home equity products, increased by about 18% from 1998 and reached US$133 billion at year end.
Commenting on the innovations in ABS market, S&P says that a new asset class emerged during the year - the auto retailer. In year 2000, the Internet could add to the supply in the ABS market and could become a fixture .
The sector to grow fast in 1999 was auto ABS with good collateral performance and increased demand for auto sales. One of the prominent auto ABS transactions in 1999 was PeopleFirst where the entire collateral was originated online. [We reported this transaction on our site - click here.]
S&P notes the increasing popularity of asset-backed commercial paper (ABCP). ABCP "conduits are being used as corporate finance tools, as investment vehicles that invest in securities for arbitrage purposes, and as a means of balance- sheet management for banks that want to offload their loans in the form of collateralized loan obligations (CLOs)" As of November 1999, ABCP accounted for nearly 40% all commercial paper in the USA.
Credit card ABS was also quite popular in 1999 as investors preferred short term liquid spread products.
In the CLO/CBO sector, the activity was mainly marked by arbitrage transactions. [Arbitrage transactions are those where the issuing banks buys loans and bonds at a higher discount, repackage them and sell them to investors making an arbitrage in the process. Where a bank securitizes its own loans, it is called a balance sheet CBO/ CLO].
According to S&P, there were fewer new asset classes in 1999 with the tobacco settlement securitization being a notable exception. [This was reported on our website - click here. ] Commenting on the new asset classes in 2000, S&P says: " The insurance/settlement niche, including lottery settlements, catastrophe bonds, and structured settlements, also should be very active in 2000. Securitization of mutual fund 12b-1 fees will also pick up speed. In addition, the market should once again see an influx of fresh new asset types."
The complete report is available on Standard and Poor's website - click http://www.standardandpoors.com/ratings/structuredfinance/index.htm
India seems to be taking a lesson from Italy where government revenues were securitized. A report in Business Standard 9 Feb. 2000 says, quoting Planning Commission Dy Chairman K C Pant that the Task Force on Infrastructure has approved a proposal to securitize a cess on petrol and diesel that was imposed last year and the amount so raised will be used to finance infrastructure projects. Pant has been quoted as saying that a bill to empower such securitization has already been cleared by the law ministry and will be taken to cabinet for approval in 10 days.
For more on securitization in India, click here.
International rating agency Moody's reported [Financial Times 8 Feb, 2000] that European ABS volumes in 1999 grew by 84% to USD 83 billion. The outstanding volume of European asset-backed securitization at end-1999 stands at USD 83 billion. With the global outstanding volume around USD 550 billion (this excludes mortgage-backed securitization), Europe accounts for about 15% of global volumes. However, since most securitization volumes are still centered in the USA, Europe accounts for more than half of non-US securitization volume.
The growth of the European market has also been helped by the easing of regulations in Italy, Spain and France. However, Moody's said legal, tax and accounting system differences between countries were still holding back the development of the market.
The past two years saw a number of the more unusual securitisations, including a œ230m bond backed by ticket sales from Tussauds Group, which comprises the world famous Madame Tussauds wax works museum and the Alton Towers theme park. Another interesting transaction was the securitization of champagne bottles [reported on this page -click here ].
More on this site - For a news report on global ABS volumes for 1999 and prospects for 2000, check here. And click here for an overview of the European securitization market. For another news report on the innovative deals expected in Europe shortly, click here.
We have earlier reported this transaction on this page - click here. The transaction was in limelight recently as analysts claimed that this transaction could well be a benchmark for emerging market originators to breach the sovereign ceiling even in case of onshore assets.
One would easily imagine emerging market transactions being rated above the country's sovereign rating. But that is in case of offshore assets, where the receivables originate from hard currency countries, and are isolated in the country of origin itself and put beyond the regulatory reach of the originator's country. For example, if a Turkish company had receivables emanating from USA, those receivables would be assigned under New York law and put beyond the powers of the Turkish government, and hence be secure from exchange rate, convertibility and transfer risks. But this is not conceivable in case of onshore receivables, where the receivables originate within the country. Such receivables are appreciably subject to transfer and convertibility risks.
However, the securitization of receivables by Garanti Leasing amounting to USD 43 million uses an innovative device to obtain an above-sovereign rating. The transaction, managed by Rabobank NV, uses Turkish lease receivables which are assigned in favour of IFC Washington to repay a loan of USD 50 million taken by Garanti Leasing. The presumption here is that IFC is internationally recognised as a preferred lender, and Turkish government will not use its sovereign powers on payments due to IFC. Hence, the transaction avoids exchange rate, convertibility and transfer risks.
Hence, DCR has rated the issue BBB against country rating B+, and Moody's has rated the issue Baa2 against country rating of B1.
Links For securitization in Turkey in general, click here.
No method has been found as yet to mitigate weather risks, but what financial jugglers are doing is to split weather into a tradeable commodity, so that the impact of an adversity is distributed to many, rather than affecting a few. The development is taking place in form of securitized weather risk, on the lines of securitization of catastrophe insurance securitization.
The weather derivatives market began in 1997 in the United States, with the European market getting under-way in 1999. The developing market is taking shape through both over-thecounter and exchange-traded vehicles. The bulk of the interest in weather derivatives to date has been from energy utilities, but market participants see the hedging instruments holding potential attractions for other industries as well.
The weather derivatives market, though based on the cat bonds technology, is a completely different concept. In the hands of an electricity company, the weather is a risk, because the potential consumption of electrical energy depends on the weather - if it too hot or too cold, the demand for air-conditioning energy goes up. Thus electricity energies faced tough business managing the risks of an unusually warm winter or cool summer.
Weather derivatives allow the originator to hedge against the risk of weather changes. Adverse weather changes are passed on the derivative holders in form of an interest remission or deferment of servicing. Typically, the weather derivatives are based on "heating degree days" or "cooling degree days"the difference between a day's average daily temperature and 65 degrees Fahrenheit-with the contracts written on the cumulative number of heating or cooling degree days over a set period.
Market participants are expecting other potential users to join weather derivatives market, such as agriculture-based industries, breweries, etc. [Based on Business Insurance Chicago, Jan 31, 2000]
Links: One of the first weather risk securitization issue, Koch Industries, was covered by our news page - click here. For a complete tabulation of catastrophe and weather derivatives issuance, click here. Also see our Insurance risk securitization page for more links and articles on risk securitization - click here.
Banco Bilbao Vizcaya Argentaria SA is proposing to launch what will be Spain first non-mortgage securitisation. It proposes to come out with Euro 1.250 billion worth bonds that will be secured by long term loans and credits to its corporate clients. The SPV, Fondo de Titulizacion de Activos BBVA-1, will issue five different types of bonds, with a maturity date of Nov 30, 2014. Each bond will have a nominal value of 200 mln eur and an annual interest rate which will vary according to the Euribor.
The Spanish securitization market is currently dominated by mortgage-backed securities.
Links: More on securitization in Spain is on our country profile on Spain where we have recently added data about Spanish securitization issues, as also an article on the Spanish securitization law - click here. Recently we carried a news item about MBS issue by regional banks in Spain - click here.
Come the beginning of calendar year, and rating agencies are at the star-gazing exercise. We have been releasing various news items on expected growth in 2000 ABS issuance in various regions. Here is the forecast for the world as a whole. Moody's released on 7th Feb its expectations for 2000 - asset-backed issues (excluding mortgage-backed issues in USA) to grow by 35% to a record US$182 billion, on the heels of 1999's record $135 billion of new ABS deals growing by 79% over 1998 volume.
Moody's feels that banks will continue to shed assets through securitization as they look for funding alternatives, and for balance sheet and capital relief. However, in emerging markets, growth prospects will be constrained by availability and liquidity of currency swaps as the investors are mostly from outside the emerging markets who have a known preference for dollar, yen or euro denominated investments.
Moody's feels that securitization growth is still hampered by varying legal tax and accounting systems. In Europe, Italy, France and Spain have taken steps to harmonise the environment for securitizations.
Mutual funds in India are currently constrained by their inability to invest in securitisation transactions - for a technical glitch. The flaw in question is the definition of a "security" in securities laws which does not presently cover securitized transactions.
The securities regulator in India, Securities and Exchange Board of India (SEBI) is considering allowing mutual funds to invest in securitised products, according to a news report in Business Line 4 Feb., quoting SEBI official Ashok Kacker. The apex housing finance body, National Housing Bank, has been pressuring SEBI to do so, since a number of housing finance companies are on the verge of a public issuance of securitized products, either directly or through the intermediation of the Bank.
Public issuance of securitized products has not taken off in India as yet - several originators in the past have been talking about such issues and it is quite likely that year 2000 should see the inaugural MBS issue from National Housing Bank.
If industry opinion is predictive, ABS market in 2000 should end up with a modest growth, indicating that securitization markets are maturing and are reaching the flat end of the S-curve of growth.
Bond Market Association, one of the most prominent industry associations in the USA, recently released data derived from a survey of the industry participants. While the industry in general expects aggressive overall economic growth during year 2000, it is less bullish on securitisation issues. This is what the survey has to say:
"Asset securitization, which has been cited in recent years' surveys as having the greatest growth potential, is still expected to grow, but not as significantly as predicted in the past. Nineteen percent of respondents expect asset securitization growth to be substantial, while just under two-thirds expect modest growth. This compares to 46% and 58% of respondents predicting substantial growth in the sector in the 1999 and 1998 surveys, respectively. The expectations are not surprising, however, as the pace of asset-backed issuance has moderated over the past few years. "
Jusco, the Japanese supermarket chain, proposes 5 of its planned stores to be securitised and thereby raise Yen 30 billion. The stores are yet to be built - in other words, securitisation will be used as a device for funding the construction of these stores.
The issue is expected to be managed by Dai-Ichi Kangyo Bank, Toyo Trust and Banking Co., Chuo Trust and Banking Co. and the governmental Development Bank of Japan. The issue wil be sold mainly to institutional investors. Jusco expects that the securitization will help it to diversify its fund-raising methods away from banks and thereby reduce interest-bearing debts on its balance sheet.
This will be the first transaction of its type for Japan where securitization of commercial properties, particularly those in construction phase, is yet to take off. But the market expects the transaction to easily lure other supermarket chains.
US House Banking Committee Chairman Jim Leach would start hearing on Feb. 8 in the matter of recent bank failures. Securitization is cited as one of the three main factors responsible for successive failures of banks in the USA recently. The other two factors are subprime lending and frauds.
Those testifying are: Donna A. Tanoue, chairman of the Federal Deposit Insurance Corp.; John D. Hawke Jr., comptroller of the currency; Ellen Seidman, director of the Office of Thrift Supervision; and Laurence H. Meyer, Federal Reserve Board governor.
Related stories and materials on this site: First National Bank of Keystone was a prominent case of bank failure apparently triggered by accounting lapses on securitization transactions - reported here with details and related links. There were other cases too - we on this site have carried news and expressed concerns over these cases - click here for an article expressing concern on bank health being depleted by securitization, here US bank regulators cautioning originators on securitization activities. Full text of the Agencies' guidelines was placed on our site - click here to read (pdf file). The story of accounting losses due to securitisation in a Californian bank was carried here. Here is a story of another bank failure apparently caused by securitization.
For securitization of bank loans in general, click here.
Year 1999 witnessed a significant growth in Australian securitization, particularly due to the trend towards global issuance, inspite of a fall in volumes towards the end of the year, says rating agency Fitch IBCA in a yearly overview of Australian market. The year saw for first time issues denominated in Euros to rope in European investors. Fitch IBCA expects these trends to continue through 2000.
Noting the remarkable trends in 1999, the agency said a record number of 7 issues went offshore during the year. The year also saw first CMBS transaction with a single borrower.
On the expectations for year 2000, the agency expects the year to see more issuers going offshore to take advantage of European and US investor base. In the RMBS market, more non-conforming mortgages, with 100% loan-to-value ratios are likely to be securitised. The market should see strong growth in the CMBS segment with single borrowers. On the emerging asset classes, the agency "expects that other asset classes could also be securitised, ranging from credit card receivables, to stadium seat licensing fees, to infrastructure projects, such as toll road receipts or power generation. These transactions will appear as market conditions and investor appetite make them economically viable for securitisation."
Links: The report titled Australian Securitisation 1999 Year-end Summary is available on the Fitch IBCA website fitchibca.com -look for Info Centre - Latest Research. We recently covered a similar report on Australia by Moody's - click here. For a country profile of Securitisation activity in Australia , click here.
Keele University of UK set a new path for funding by educational institutions when it raised Euro 69.4 million in bonds backed by rent receivable from students. Financial Times UK commented on this transaction in the following words: "Keele University yesterday [31st Jan, 2000] launched the first bond in Britain backed by rental income from its student accommodation. The bond ... could transform the way universities fund themselves". [We have commented earlier about this transaction and other innovative applications of securitisation in Europe - click here] .
The transaction allows the University both cheaper and longer-term funds. The bonds, to mature in 30 years total maturity, were priced at 170 basis points over government securities of the same tenure. The bonds are guaranteed by Financial Securities Assurance, a monoline insurance company active in securitisation transactions.
Last year, a UK hospital raised Euro 92 million by securitisation.
Links : For more about the overall securitisation market in UK, click here.
Four Spanish regional savings banks recently launched the year’s first securitisation of prime European mortgages, with a Eu660.6m deal lead managed by Crédit Agricole Indosuez, Dresdner Kleinwort Benson and EBN Banco. Caja de Ahorros del Mediterráneo contributed 37.8% of the collateral to TDA 11; Caixa Tarragona 22.8%; Caixa Terrassa 21.5% and Caixa Manresa 18%.
The issue was broken into 3 tranches with the senior most getting Aaa rating from Moody's. The issue received very good response from mutual funds and other institutional investors from Europe.
Links: For general coverage on Spanish securitisation market, click here.
The data for MBS issuance in the USA for 1999 was recently released. Classified into RMBS (agency and non-agency), CMBS and home equity loans, the data gives listing of the top 10 managers of MBS issues in the largest MBS market in the World.
Residential Agency Mortgage-Backed Securities
Residential Non-Agency Mortgage-Backed Securities
Commercial Mortgage-Backed Securities
Home Equity Loan Backed Securities
Agency and Non-agency: Full credit to book manager; public issues;
Source: Securities Data Co.
Cofiri, the Italian state-controlled merchant bank, has signed a collaboration agreement with Bank One, the fifth largest bank in the US and one of the leading international players in asset backed securities, with around 2,000 outlets in 14 Midwest and Southwest states and numerous subsidiaries in 11 other countries.
The two will collaborate in the structuring of securitisation operations. Italian industrial and credit concerns and their European subsidiaries will benefit from the financial know-how and sophisticated security instruments.
Links: See our country profile for Italy - click here. The Italian securitization law is placed on our Laws section - click here. A very comprehensive article, in Italian, on the Italian law by Lucia Mazzocco is also on site - click here.
If you have any contribution to make about Italian securitization market, please do write to me.
Asia's cross-border securitization issuance volume may reach US$2 billion in 2000, predicts Moody's Investors Service in its annual market outlook for the area. The volume in 1999 was USD 1.73 billion.
Moody's expects commercial mortgage-backed deals and CDOs to make up the bulk of the issuance, with many deals originating in Hong Kong, Korea, and to a lesser extent Singapore, and is on the lookout for the development of domestic ABS markets over the next 12 months.
The growth rate in 1999 was dramatic: from USD 750 million in 1998.
It is notable that the above data only includes international offerings and not domestic issuance.
Among the countries that have substantial potential for securitization, Moody's finds China as remarkable, because of its size and diverse types of asset classes.
Morgan Stanley heralded securitization markets into the e-commerce age with the first ABS issue being marketed online — a $526.316m credit card deal for its subsidiary Discover Financial Services. This was offered during 18th -20th January.
Incidentally, this coincides with a major e-commerce initiative by the World Bank where the Bank has offered USD 3 billion bonds on the Net. In fact, even the Fannie Mae is now offering its products online.
The Morgan Stanley Dean Witter offer was placed on the ClientLink section on its website where investors were able to lodge expressions of interest, and orders were firmed up on the same site after the deals were priced.
A recent article in ABA Banking Journal [December 1999] published by the United States of America expresses concerns about the massive extent of "regulatory arbitrage" inherent in securitization transactions. Regulatory arbitrage refers to a bank trying to parcel out high grade assets, currently requiring 8% risk capital, and acquiring a small fraction of junior participation in the securitized debt, which, being much lesser than 8%, would give the bank a release of regulatory capital.
Author of this article Ed Blount, contributing editor, and Executive Director, The ASTEC Consulting Group, Inc., New York, N. Y, says that : "Securitization has become a crucial source of funding to the entire banking industry. By March 1998, Federal Reserve staffers working with the BIS committee reported that the ten largest U.S. bank holding companies had $200 billion outstanding in nonmortgage, securitized bonds-a value equal to 25% of their risk-weighted loans. A committee working paper pointed out, with unusual drama, that, "The securitization activities of these companies loom large in relation to their balance sheet exposures." Nor is the magnitude of securitization confined to U.S. banks. European regulators reported that over $40 billion in new securitized issues had been floated in 1997 by banks and nonbanks, up fivefold in Just two years.
"No one knows the total capital reduction in banks with securitized balance sheets, but BIS analysts have used succinct examples to dramatize their call for reforms. In one-example, an 8% capital charge for a bank's threemonth loans to a prime corporate account in its banking book is shown as cut to 0.25% when the same bank buys the same company's 90-day commercial paper to hold in its trading book. Quite apart from the implied threat of declining bank solvency, a release of capital on anything approaching this magnitude must have already had a profound impact on the economy through increased bank activity, since most securitizations are assumed to have resulted from regulatory arbitrage."
The article will be continued in the forthcoming issue of the Journal, and on this website, we will endeavour to bring you abstract of the next part as well.
More such reading materials : The Bank for International Settlements has produced an article that alleges regulatory capital arbitrage in securitisation transactions - click here to go to the article. We have also carried earlier on this site reference to an article in The Economist which made expressed similar concerns - click here to visit this item.
A new asset class with a substantial potential emerged in the asset-backed securitization market in 1999: securitization of fees for managing mutual funds. Several issues of this class were noted in 1999: including the $91 million deal issued by Putnam, Lovell, deGuardiola & Thornton in July, a $200 million deal from Constellation Financial Management, via Bear, Stearns & Co. Further, BISYS Fund Service Inc. recently announced plans to embark on a series of deals in first-quarter 2000.
The typicality of these offering is that it is not the mutual fund itself which is the originator: banks buy the fees from the fund, and they in turn securitize the fees in the market. There are even potentials of a one originator buying fees from several mutual funds, pooling them together and securitizing the same.
Colombian coffee growers resort to securitization as sovereign ratings remain speculative
Use of securitization to pierce sovereign ratings is common in emerging market countries, particularly those with a poor country rating. As the sovereign rating of Colombia continues to be below investment grade, its coffee-exporters have to look at securitization as the means for cheaper international funding.
Federacin Nacional de Cafeteros de Colombia (Fedecafe) recently securitized its future coffee export proceeds and obtained an A- rating and priced its debt at least 200 basis points cheaper than the country's sovereign debt.
There are numerous such instances in Latin America - Mexico's Pemex, Venezuela's PDVSA and Colombia's Ecopetrol have all resorted to future flows securitization.
Fedecafe is a private, non-profit Colombian consortium that, in its capacity as national representative of the Colombian coffee growers, manages the Coffee Fund, a $1.3 billion parafiscal account that is comprised of public funds. The primary objective of the Coffee Fund is to stabilize coffee revenues in Colombia by reducing the effects of international coffee price fluctuations.
Links For more on securitization markets in Colombia, see our country profile - click here. For other Latin American countries, click the respective country pages. For general coverage on the Latin American market, click on the this page.
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