The Banking & Finance and Capital Markets Team at EPAM has successfully completed the legal support of another securitization of mortgage assets for the Housing Finance Bank (AO Bank ZhilFinance).

The transaction involved the placement by each of the two SPVs (mortgage agents) of two tranches of mortgage-backed bonds with different execution priorities.

The senior-tranche bonds of each mortgage agent placed by public offering were secured by both, mortgage collateral and guarantee, provided by the Agency for Housing Mortgage Lending OJSC (AHML). The junior-tranche bonds, where the obligations are performed only after fulfillment of obligations under the senior-tranche, were all offered to AO Bank ZhilFinance by private subscription, thus improving the credit quality of the senior-tranche bonds.

With direct participation of the Firm’s lawyers, the special-purpose loans taken by ZAO IA Pulsar-1 and ZAO IA Pulsar-2 to purchase the mortgage certificates constituting the mortgage collateral have been successfully repaid within the scheduled timelines. The loans were repaid with the proceeds from the bond issue.

The transaction was particular due to its structure providing for monthly bond coupon payments, as well as due to insurance contracts to cover the lender’s financial risks within in relation to part of the mortgage collateral. The Firm’s associates were able to amended the contract and issue documents to account for the new legislation in ‘real time’ throughout the implementation of the project.

The Banking & Finance and Capital Markets Practice Team at EPAM, including senior associate Oleg Ushakov, associates Vladimir Goglachev and Nadezhda Morgunova, as supervised by partner and the head of practice Dmitriy Glazounov acted as legal counsel on the deal.

“The structure of the deal is very efficient for our bank, this is largely thanks to the high-quality legal support”, comments Chairman of the Housing Finance Bank Ruslan Iseev.

“This is the third securitization transaction, which the Housing Finance Bank implements together with Dmitriy Glazounov’s team. All the goals were achieved, and novel approached to resolve problems encountered on such projects have been found”, says the Vice President for Capital Markets of the Housing Finance Bank Yulia Kazantseva.

“We are delighted to repeat the successful cooperation with the strong and professional team of our long-term client. As part of each transaction, we aim to fine-tune and innovate, which makes such cooperation interesting from a professional point of view”, states Dmitriy Glazounov.