WASHINGTON, D.C., January 13, 2000 —
In an innovation that breaks new ground for financing in developing countries,
the International Finance Corporation has closed a securitization transaction
based on receivables from the leasing of equipment. IFC recently closed
the US$50 million transaction with Garanti Finansal Kiralama A.S. (Garanti
Leasing), the biggest leasing company in Turkey.
This is the first international securitization of receivables from equipment
leasing in an emerging market. The transaction has been structured as a
limited recourse financing which will be paid down from a pool of lease
receivables that has been assigned to the IFC. IFC provided about $7.2
million equivalent in four A loans for its own account, in euros and dollars;
and about $43 million equivalent for the account of an offshore special
purpose company, which is the sole participant in the IFC B Loan and has
issued asset-backed securities to fund this participation.
Garanti Leasing will use the proceeds of the financing to improve asset-liability
management and to originate new leases. "We are very proud of this
securitization, the first of its kind, that will lead other financial institutions
in Turkey to penetrate foreign markets by using on-shore assets,"
said Mr. Mahfi Ešilmez, Chairman of the Board of Garanti Leasing.
"Securitization is a powerful financing technology for emerging markets
borrowers, who are constrained by corporate and sovereign ratings, to raise
finance," said IFC Executive Vice President Peter Woicke. "This
pioneering transaction with Garanti Leasing in Turkey will open the way
to using this mechanism to raise capital in other developing countries
where there is a need for long-term financing." Mr. Woicke noted also
that the rigorous operations and management standards required by this
kind of transaction can foster stronger financial institutions.
Apart from backing the loan with future revenue streams rather than corporate
assets, the securitization was designed to protect lenders through over-collateralization,
or assigning more receivables for repayment than are actually necessary
to cover the loan. The transaction is also designed to be remote from the
health – or even the bankruptcy – of the originating company because
revenues from the assigned lease receivables would continue to accrue to
the lender even if the company went out of business.
The asset-backed securities issued by the participant were rated Baa2 by
Moody's Investors Service and BBB by Duff and Phelps Credit Rating International,
and were fully underwritten by Rabobank International. Bear Stearns acted
as advisors to Garanti Leasing.
The mission of IFC, part of the World Bank Group, is to promote private
sector investment in developing countries, which will reduce poverty and
improve people's lives. IFC finances private sector investments in the
developing world, mobilizes capital in the international financial markets
and provides technical assistance and advice to governments and businesses.