The automobile market in the United Arab Emirates (UAE) is expected to continue to grow and, with Japanese automobiles accounting for a 60% share of the market, it is considered a promising market for Japanese automakers.
JBIC acquired 19 billion yen of securitized notes backed by auto loan assets originated by Emirates NBD PJSC (ENBD, the Originator*1), which is the largest bank in the UAE in terms of assets (the APC Notes), and guaranteed the principal of repackaged notes using 15.2 billion yen of the APC Notes as collateral (the Repack Notes), which were sold to investors in the Japanese capital market.
Since October 2008, JBIC has added securitization operation 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 of the Repack Notes (i) reduces the country and structure risks associated with the APC Notes, thereby providing a new investment opportunity to the financial market, and (ii) satisfies the need of the Originator to diversify funding sources. This deal supports 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 Japanese automobile manufacturers.
- *1The Originator is the initial owner of the securitized assets.