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ENSeC issues $350 million floating rate bonds

DUBAI — The booming real estate sector in the UAE has got one more innovative liquidity source yesterday as the Emirates National Securitisation Corporation (ENSeC) announced the successful closure of the first-ever, AAA rated, asset-backed securitisation.

ENSeC Home Finance Pool I, Ltd., a company organised by ENSeC, issued $350 million of floating rate, secured notes, due in 2014. The bond issue, rated AAA by Standard & Poors and Aaa by Moody's, is known as ENSeC 2005-R1 and will offer a return of 20 basis points above 3-month libor.

Credit support for the ENSeC 2005-R1 come from $350 million worth mortgages provided to buyers of villas, town-homes and apartments at The Palm, Jumeirah and cash collateral.

ENSeC, the only securitisation company in the region is controlled by Istithmar. The entity was created specifically to facilitate the development of a secondary mortgage system in Dubai, similar to Fannie Mae and Freddie Mac in the United States.

“This bond issue is intended to be the first in a continuing series of residential and commercial securitisations collateralised by UAE based mortgages,” said Andrew L Farkas, Executive Vice Chairman of ENSE.

“This is an enormous step forward for Dubai as we continue to integrate with the global economy. It is critical in the development and evolution of our economic and financial system. DIB is honored to have played a significant role in the establishment of ENSeC and in providing financing for Nakheel and The Palm,” said Dr. Mohammed Khalfan bin Khirbash, Minister of State for Finance and Industry and Chairman of Dubai Islamic Bank.

The issue has been offered through ENSEC Home Finance Pool, a Cayman Island registered special purpose vehicle (SPV) and the sole book runner is Barclays Capital Inc. The transaction was structured by Island Capital Group LLC of New York. The bonds were marketed exclusively to US and European institutions primarily to maximize Dubai's exposure to the global capital markets. Demand for the issue was in excess of $4 billion.

“This time the SPV was created in Cayman Islands and in the future we have the possibility of registering similar SPVs in the Dubai International Financial Centre,” Farkas said.