Deal could pave the way for more this year
The local securitization market was given a significant boost today with the announcement by Absa Capital, the investment banking division of Absa Bank Ltd, that it had raised R760m in the year’s first securitization deal.
Absa Capital raised the funds through the issuance of residential mortgage backed securities with a 12 month maturity for Nqaba Finance 1 (Pty) Ltd, the securitization vehicle of Eskom Finance Company (Pty) Limited (EFC).
The funding raised in the debt capital markets will be applied by EFC to fund a portion of EFC’s home loan book in respect of employee home loans.
Jacques Els, Head of Debt Capital Markets at Absa Capital, said: “It’s very gratifying to be able to do a deal like this for our client under these tough market conditions. It has also been particularly pleasing to see the diverse base of investors that participated in this first securitization deal for the year.”
The success of the deal was based partly on the efficient management and outstanding quality of the EFC home loan book. Employees have their monthly bond payments deducted from their salaries by Eskom so default rates are very low.
Els also noted that the deal proves that the outlook for the securitization market in South Africa may be improving.
“The situation remains challenging at present but we think that there will be more deals this year,” said Els.
About Absa Capital
Absa Capital, a division of Absa Bank Limited (Absa) and affiliated to Barclays Capital, is a leading South African investment bank with global reach, offering clients financing, risk management and advisory solutions in a wide range of currencies and structures across the globe.
About Absa Capital Debt Capital Markets (DCM)
Absa Capital’s Debt Capital Markets division (DCM) provides large corporates, banks, state-owned entities in Governments across South Africa and sub-Saharan Africa with sophisticated debt capital market funding solutions. These include bonds, commercial paper, asset backed securitization and hybrid debt, including convertible bond and preference share funding.
In 2008, Absa Capital concluded a number of major DCM deals, further entrenching its position as a key market participant in all aspects of DCM finance. Absa Capital excelled at the Bond Exchange of South Africa (BESA) Spire Awards 2008, receiving awards for Best Primary Markets House, Best Bond Sales Team and Best Credit Analyst.
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