Date: 11.09.2024
KIAP has seen through an off-balance-sheet transaction of VTB Bank 24 residential mortgage portfolio securitization by means of an issue by a mortgage agent of fully redeemable non-convertible documentary interest-bearing class A and class B residential mortgage-backed bonds, to mature on 7 September 2054. The total bond issue is worth in excess of 46 bln roubles. This is the largest securitization transaction in terms of issue size completed under Russian law in recent years (according to Cbonds). Additional security for the bonds was provided in the form of surety stood by OAO Housing Mortgage Lending Agency.
Following a listing of class A mortgage-backed bonds on the Moscow Exchange on 29 December 2014, they were included in the Bank of Russia Lombard List. The class B bonds, subordinated to class A bonds, were offered over the counter on 29 December 2014. Bank VTB 24 served as transaction originator, Ernst & Young (Moscow) as tax consultant, and KIAP as the sole legal advisor for the transaction.
The firm provided comprehensive legal support in developing certain building blocks of the transaction, in drafting issue and contract documentation, in supporting the issuer's disclosures, as well as by delivering a national legal opinion). Moreover, in the framework of the project KIAP experts were in close coordination with the Moscow Exchange, National Clearing Depository (NCD), Agency for Housing Mortgage Lending (AHML) and the Bank of Russia.
“What was distinctive in the support for the transaction was the need to factor in the legislative innovations on the securities market regarding the protection of investor rights and to the arrangements for the satisfaction of claims on bonds,” comments Julia Osadchaya, partner and head of banking and finance practice at KIAP. “Also, the transaction involved a mortgage agent, set up several years ago, which called for additional attention to accounting records. Moreover, besides the originator, another mortgage agent took part in the transaction as a second seller. This, as well as the structural addition of AHML's suretyship to the contract resulted in new elements and objectives being factored into the transaction, which we successfully took on board.”