Eurobank will be the first bank to securitize its mortgage loans, putting up for grabs a security based on a portfolio worth 2 billion euros. According to a teaser sent to candidate investors, the portfolio will contains around 44,000 loans, all of which have long been classified as nonperforming.
The majority of the loans in question have been in arrears for at least six months, and in some cases over a year, while the average value of each mortgage comes to 80,000 euros. The procedure began last week with the opening of the data rooms. Morgan Stanley is Eurobank’s consultant in the initiative.
This will be the first mortgage loan securitization by a Greek bank since the outbreak of the financial crisis. Its success is expected to serve as a catalyst for the securitizations market, which has remained closed to the country’s banks over the last few years.
The objective of Eurobank’s management is to have the entire procedure completed by the middle of 2019, while a parallel process should see the start of the major securitization of 7 billion euros announced by the Greek lender in the context of its merger with Grivalia Properties.
According to what Eurobank has already announced with regard to the merger plan with Grivalia, loans adding up to 7 billion will be transferred to a special-purpose vehicle, and there will be bonds issued on them to be sold to investors. The loans of 7 billion euros to be transferred to the SPV carry provisions of 3.8 billion euros. For the loans adding up to 3.2 billion euros without any provisions, there will be two bonds issued, one senior note of 2 billion euros that the bank will hold and a mezzanine structure of 1.2 billion that will be partly granted to old shareholders and partly to a strategic investor who will acquire Eurobank’s NPL management subsidiary, FPS.
Once the loan securitization provided for by the Eurobank-Grivalia plan is completed, FPS will be the biggest NPL management company in the country with a portfolio of 25 billion euros and a corporate value estimated at 400 million euros.
The entire plan aims at reducing the bank’s nonperforming exposures to just 6 billion euros by the end of the year, bringing down the bank’s NPE index to 15 percent.