Securitization in Emerging Markets - Turkish Case -

Transcription

1 Securitization in Emerging Markets - Turkish Case - Bratislava, May 15, 2008

2 The Real Story Six Phases of a Securitization Project Daruma is an independent and the leading Turkish Corporate Finance House Converted itself to fully licensed Securities Investment & Brokerage House Established in 1998, 40 professionals now, headquartered in Istanbul with liaison offices in Bucharest and Sofia Differentiated by strong origination ability, structure (financial and legal), and close quality deals Dedicated, experienced and competent management team with strong entrepreneurial skills In addition to Turkey, serves to a wider geographical area Bulgaria, Romania and India Widespread financial products & services portfolio The vision is to become leading regional Corporate Finance House and provide high quality investment banking services Strong track record with more than 225 closings and deal volume in excess of USD 2.5 Bn Exclusive Corporate Finance Partner with LBBW, M&T Bank, Dubai Bank and Turkish Partner of Merger Alliances 2

3 The Real Story Six Phases of a Securitization Project Enthusiasm Disillusionment Panic Search for the Guilty Punishment of the Innocent Praise and Honors for the Non-Participants This is pretty much the market experience for every transaction irrespective of the geography and size... 3

4 General Outlook Turkey and the surrounding geography including Romania and Bulgaria offers vast potential for the securitization market Albeit this potential, there is lack of a corporate securitisation market in those countries Financial sector companies represent the sole set of originators Current asset classes are limited to credit card receivables, check receivables, diversified payment right receivables, leasing receivables Therefore, promising future for various asset classes in corporate balance sheets Similarly, room for different types of Asset Backed instruments for the development of the market 4

5 Borrower s Charecteristics There are conceptual differences in the definition of SMEs amongst different countries EU Member States traditionally had their own definition of an SME, though converging into same standards lately The current SME definition by the EU categorizes companies with fewer than 50 employees as "small", and those with fewer than 250 as "medium. Turkey also uses the same definition The main difference between Turkey and EU regarding SME definition is the turnover consideration: Minimum annual turnover treshold according to the EU countries is 2 million to 49 million. In Turkey, its is between million Hence, the initial steps should be rather extending securitization transactions to upper-middle market companies before reaching SME s 5

6 Market Enviroment for SME s Easier access to bank markets - Availability of standardized, commodity financing products for SME s, mainly from domestic banks SME s may prefer to use evergreen revolving facilities backed by existing receivables mostly for post financing; similarly, Reverse Factoring is developing No domestic capital market financing availability Relative inadequate sophistication of financial markets and products Lack of know-how on the corporate side for alternative financing sources Crowding-out effect of financial sector originators Developing legal framework and regulatory control over securitization transactions 6

7 Situation Analysis Originator Challenges To create efficient, reputable asset classes To achieve Pricing Advantages, preferably below Sovereign To achieve Cost Efficiency, bearing in mind the small sizes of the companies and the underlying asset volumes To create user-friendly transaction structures with solid credit enhancements To work out with the underlying legal framework and translate it to investor language To reach the investor base by strong and efficient distribution channel Getting the rating agencies on board relative inexperience for corporate rating strategies Getting the monoline insurers on board smaller deal sizes 7

8 Situation Analysis Investor Base Challenges Mostly first comers to the market Volatilities in Emerging Markets Relatively scarce lines for SME s, especially for new comers Need to have credit enhancement for portfolio investors lower deal ratings Difficulty of price comparisons lack of track record Need for mitigating the servicing risk and streamlining securitization operations Need for sound investor reporting mechanism 8

9 Sample Case Studies Financial Sector Originators, Banks Diversified Payment Right Securitizations for banks to obtain long term funding Approx Eur 10 Bn of existing deal size for various originators Asset classes including trade payment receivables, worker remittances, money transfers from mostly OECD countries Securitization of hard currency off-shore receivables Future Flow / True Sale Investment grade structures wrapped by monoline insurers Private Placements, 144 A s - Continuous re-issuances 5 to 10-years facilities, arranged by investment banks, serviced by the originators 9

10 Sample Case Studies Financial Sector Originators, Leasing Co s Leasing Receivables Securitizations for Leasing Companies to obtain further liquidity Relatively smaller tickets Eur 100 to Eur 250 Millions for only selective originators Underlying assets comprising of corporate and commercial leasing receivables Hard currency, domestic receivables Existing Flow / True Sale structures partial guarantee by IFC umbrella Private Placements, 144 A s 5 to 7-years facilities, arranged by investment banks, serviced by the originators 10

11 Prospects Ahead.. Growing company sizes and improving domestic capital markets Developing mortgage market boost for securitization concept in domestic market Increasing need for alternative financing sources Increasing demand for longer tenor financings Improving risk understanding and appetite on the investor side Converging operational, accounting and corporate governance practices 11

12 Contact Daruma Corporate Finance Inc. Address: Büyükdere Cad Maya Akar Center Floor 27 Esentepe Istanbul / TURKEY Telephone: Fax: E Mail info@daruma.com.tr 12

13 Contact Contacts: Mr. Okan Altug Managing Partner Mr. Bertan Yordem Partner International Finance & Structuring 13