Baker & McKenzie Advises DeltaCredit on a Pioneering Covered Bond Transaction

 

The covered bonds were issued in accordance with Federal Law No. 152-FZ “On Mortgage Backed Securities,” dated 11 November 2003 (the “Mortgage Securities Act”) and benefit from the Issuer’s obligation to pay interest and principal on the bonds and, if the Issuer defaults, the economic benefit of a collateral pool (the cover pool), which is ring-fenced and does not form part of the Issuer’s bankruptcy estate.

 

“We are very excited about this transaction,” said Vladimir Dragunov, partner and head of the Russian structured finance practice at Baker & McKenzie Moscow. “Typically, Russian covered bond transactions have been rated on the basis of the credit rating of the issuer or guarantor without taking into account the underlying structure of the transaction, the robustness of the Mortgage Securities Act and the value of the cover pool. A lot of work was put in on this deal to provide the necessary legal comfort on the transaction structure and the operation of the Mortgage Securities Act. Prior to this transaction there was a lot of uncertainty as to the rating uplift that might be achieved on a Russian covered bond transaction and I am sure that this transaction will open the door for a number of other banks to issue covered bonds.”

 

Over the past two years Baker & McKenzie has acted on multiple mortgage covered bond transactions as well as “true sale” securitizations of mortgages in Russia.

 

The Baker & McKenzie team included partner Vladimir Dragunov and associates Sergey Samokhvalov and Maxim Temchuk.

 

 

Founded in 1949, Baker & McKenzie advises many of the world’s most dynamic and successful business organizations through more than 4,000 locally qualified lawyers and 6,000 professional staff in 72 offices in 45 countries. The Firm is known for its global perspective, deep understanding of the local language and culture of business, uncompromising commitment to excellence, and world-class fluency in its client service. Global revenues for the fiscal year ended 30 June 2012 were USD2.313 billion. Eduardo Leite is Chairman of the Executive Committee. (www.bakermckenzie.com)

 

 

Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm.