Standard Bank Group and BMW Financial Services establish R10bn securitisation programme
27 September 2011

Standard Bank Group has successfully established a R10-billion securitisation programme called SuperDrive Investments for BMW Financial Services South Africa. It simultaneously issued the first tranche of R2-billion to local institutional investors earlier this month. 

Megan McDonald, head of Standard Bank Group's structured capital markets team, says local institutions have warmly received the deal. 

Demand was good, she says, with the R2-billion tranche attracting bids of R2.6-billion from 16 bidders. With the securitisation market having suffered during the global financial crisis, this successful issuance is further evidence that South Africa's securitisation market is steadily picking up. 

Data from rating agency Moody's shows the South African securitisation market hit a record R42-billion in funds raised in 2007 before falling to R7.6-billion in 2009 and recovering somewhat to R11-billion in 2010. 

"We have seen quite an improvement in issuance so far this year, demonstrating a healthy pick-up from 2010 levels and Standard Bank has done a large portion of that business. However, the BMW Financial Services issuance is one of the largest long-term issuances for some time, as well as the largest local issuance that BMW Group Financial Services has done," says Ms McDonald. 

The securitisation market has not escaped the market volatility of recent years, however the success of this issue in the current markets has underscored the confidence investors place in the product and in BMW Group Financial Services as originator and servicer. 

"The good reception investors gave the transaction is illustrative of the high regard the market has for BMW Group Financial Services as a securitisation sponsor. This contributed significantly to the success of pulling off so large an issuance in the uncertain market conditions prevailing at the time." 

BMW Group Financial Services is a familiar issuer on the securitisation market in South Africa, having been one of the most frequent issuers since the early-2000s with nine issues under its belt. The new SuperDrive programme will enable BMW Group Financial Services to raise longer term funding and better manage its treasury position. 

"The securitisation market continues to be supported by institutional investors who recognise the value offered by strong sponsors such as BMW Group Financial Services and programmes issuing highly rated notes which offer yield pick up over other similarly rated debt instruments. The notes were issued within the price guidance that we would expect bonds to be issued for at an auction," she says. 

Securitisations are issued at a floating rate linked to the interbank lending rate benchmark, or Jibar, which is currently at about 5,5%. With confidence returning, the yield spread between Jibar and securitisation yields is falling, 

Ms McDonald adds that as the securitisation market continues to improve local arrangers expect that there will be more and more opportunity to do such deals. 

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