JBIC Acquires Securities Backed by Auto Loans and Provides Guarantee for Securitization in UAE Supporting Stable Supply Chain for Facilitating Auto Sales in the Middle East
International Business Development NR/2010-26
August 11, 2010
August 11, 2010
- The Japan Bank for International Cooperation (JBIC; President & CEO: Hiroshi Watanabe)*1 signed on August 10 agreements on (i) acquiring securitized notes, in their entirety, backed by auto loans*2 to private and commercial obligors in the UAE (the APC Notes) originated by Emirates NBD PJSC (ENBD, the Originator*3)*4 and (ii) transferring a portion of the APC Notes to a special purpose vehicle and providing a guarantee on the principal of such portion (the Repack Notes). In this securitization deal, JBIC acquires 19 billion yen of the APC Notes and provides a guarantee on the principal of 15.2 billion yen worth of the Repack Notes.
- This is the first securitization originated by ENBD, the first securitization backed by auto loan assets in the UAE and the first securitization deal for JBIC. Since October 2008, JBIC has added securitization to its conventional financial operations, such as loans and guarantees, in an effort to employ new financial instruments that complement private sector financing activities. Participation by JBIC as a guarantor will (i) reduce the country and structure risks associated with the APC Notes, thereby providing a new investment opportunity to the financial market, and (ii) satisfy the need of the Originator to diversify funding sources.
- The automobile market in the UAE is expected to continue to grow going forward. However, while auto sales are generally made with auto loans in this market, local banks are currently the only providers of these loans. This deal will support smooth provision of auto loans by local banks, thereby helping promote steady growth in the UAE automobile market and serving to uphold and expand an important market for automobile manufacturers.
- *1 JBIC is the international wing of the Japan Finance Corporation (JFC; Governor: Shosaku Yasui).
- *2 An auto loan is a personal loan taken to purchase an automobile.
- *3 The originator is the initial owner of the securitized assets.
- *4 ENBD is a local bank in the UAE and the largest bank in terms of assets in the Middle East. The Government of Dubai holds 56% of its total outstanding shares.