A unique collateralized bond obligation that features a portfolio of public sector finance reference obligations recently closed. Wise 2006-1 is a GBP1.5 billion (USD2.94 billion) privately-placed synthetic balance sheet deal for the Dublin branch of Dexia Credit Local, and was co-arranged by Dexia and Credit Suisse.
The portfolio references 31 public sector infrastructure bonds, which finance projects such as roads, utilities, hospital construction and management, as well as accommodation for military personnel. “In the future, they can do replenishment with bonds issued from countries in the European Union, and Australia, provided they have an Aa3 rating,” said Bongani Dlamini, analyst at Moody’s Investors Service in Paris. “Right now, though, the bonds are all U.K.-issued, with the condition that each one has to be guaranteed by a monoline.” The monolines that have wrapped the underlying bonds are AMBAC, Assured Guaranty, CIFG, FGIC, FSA, MBIA and XL Capital Assurance.
The super-senior notes priced at a spread of plus 30 basis points over three-month Euribor, while the AA-rated class B tranche priced at plus 37 bps. The low AA-rated class C notes priced at plus 39 bps.
Ron Thompson, head of ABS structured finance research at Royal Bank of Scotland in London, said the transaction has a particularly novel structure. “We haven’t seen many of these before--this features loans mainly for infrastructure that were all wrapped, which is unusual,” he said. “We are seeing all sorts of capital positioning trades as the year ends.”
Repeated calls to Dexia Credit Local in Dublin were not returned by press time. Credit Suisse also did not return calls.