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Mortgage Finance Home Ownership Tr aining Workshop) A presentation to The Federal Capital Territo ry

Mortgage Finance

Home Ownership Training Workshop)

Mortgage Finance Home Ownership Tr aining Workshop) A presentation to The Federal Capital Territo ry Administration
Mortgage Finance Home Ownership Tr aining Workshop) A presentation to The Federal Capital Territo ry Administration
Mortgage Finance Home Ownership Tr aining Workshop) A presentation to The Federal Capital Territo ry Administration
Mortgage Finance Home Ownership Tr aining Workshop) A presentation to The Federal Capital Territo ry Administration
Mortgage Finance Home Ownership Tr aining Workshop) A presentation to The Federal Capital Territo ry Administration
Mortgage Finance Home Ownership Tr aining Workshop) A presentation to The Federal Capital Territo ry Administration
Mortgage Finance Home Ownership Tr aining Workshop) A presentation to The Federal Capital Territo ry Administration
Mortgage Finance Home Ownership Tr aining Workshop) A presentation to The Federal Capital Territo ry Administration

A presentation

to

The Federal Capital Territory Administration and Federal Mortgage Bank of Nigeria

ry Administration and Federal Mortgage Bank of Nigeria By Sonnie Ayere MD/CEO UBA Global Markets 16th

By

Sonnie Ayere

MD/CEO UBA Global Markets

ry Administration and Federal Mortgage Bank of Nigeria By Sonnie Ayere MD/CEO UBA Global Markets 16th

16th of September, 2005

ry Administration and Federal Mortgage Bank of Nigeria By Sonnie Ayere MD/CEO UBA Global Markets 16th
ry Administration and Federal Mortgage Bank of Nigeria By Sonnie Ayere MD/CEO UBA Global Markets 16th
Estimated Mortgage Affordability
Estimated Mortgage Affordability

Average House Price Loan-To-Value Amount Borrowed

Combined Income Per Annum

Combined Income Per Month

Monthly Income in US$

Total Population Amount of Eligible borrowers % of total population

NGN 2,500,000.00

95%

NGN 2,375,000.00

3.5

NGN 678,571.43

12.00

NGN 56,547.62

$

135

418.87

130,000,000.00

17,550,000.00

13.50%

• If 13.5% of the total population can earn a monthly income of NGN60k per month upwards then…….

13.5% of the total population can earn a monthly income of NGN60k per month upwards then…….
13.5% of the total population can earn a monthly income of NGN60k per month upwards then…….
13.5% of the total population can earn a monthly income of NGN60k per month upwards then…….
2 Debt Capital Markets
2
Debt Capital Markets
Estimated Nigerian Mortgage Market
Estimated Nigerian Mortgage Market

Estimated Population Estimated Working Population (%) Number of working Adults

% working adults acceptable as mortgagors (Prime / Sub-prime) Number of Adults eligible to borrow

Average House Price

Possible current mortgage Market

UBA's estimated balance sheet size

Mortgage Market Cover

• Approximately NGN44 trillion could easily be the market in Nigeria

• To cover the market, we would require 100 banks with NGN400bn all invested in mortgages!!

• So what’s all the fuss on a NGN100bn bond issue ????

NB - All numbers and percentages are estimates

its a trickle!

- All numbers and percentages are estimates its a trickle! 130,000,000.00 30% 39,000,000.00 45% 17,550,000.00 NGN

130,000,000.00

30%

39,000,000.00

45%

17,550,000.00

NGN 2,500,000.00

NGN 43,875,000,000,000.00

NGN 400,000,000,000.00

109.69x

45% 17,550,000.00 NGN 2,500,000.00 NGN 43,875,000,000,000.00 NGN 400,000,000,000.00 109.69x 3 Debt Capital Markets
45% 17,550,000.00 NGN 2,500,000.00 NGN 43,875,000,000,000.00 NGN 400,000,000,000.00 109.69x 3 Debt Capital Markets
3 Debt Capital Markets
3
Debt Capital Markets
Mortgage Finance A Market Maker’s Perspective

Mortgage Finance A Market Maker’s Perspective

What is a Mortgage

What is a Mortgage

What is a Mortgage Bond
What is a Mortgage Bond

• A mortgage bond can simply be described as a long term borrowing by one or more individuals where the borrowing is secured by a lien, first or otherwise over a purchased property

• Mortgage loans could be advanced from as little as 10 years and in some cases, particularly the USA, 30 years

could be advanc ed from as little as 10 years and in some cases, particularly the
could be advanc ed from as little as 10 years and in some cases, particularly the
could be advanc ed from as little as 10 years and in some cases, particularly the
6 Debt Capital Markets
6
Debt Capital Markets
General Amortisation Profile
General Amortisation Profile

240 M o nth M o rtage Am o rtisatio n P rofile

3,000,000.00

2,500,000.00

2,000,000.00

1,500,000.00

1,000,000.00

500,000.00

-

1 12 23 34 45 56 67 78 89 100 111 122 133 144 155
1
12
23
34
45
56
67
78
89
100
111
122
133
144
155
166
177
188
199
210
221
232

No. of M onths

• Mortgages generally amortise, paying principal and interest over the life of the loan

M onths • Mortgages generally amortise, paying princi pal and interest over the life of the
M onths • Mortgages generally amortise, paying princi pal and interest over the life of the
M onths • Mortgages generally amortise, paying princi pal and interest over the life of the
7 Debt Capital Markets
7
Debt Capital Markets
Mortgage Amortisation Profile
Mortgage Amortisation Profile

• In the initial years, principal repayments are negligible

• In the latter years interest repayments are negligible

• All through, monthly repayment remain the same – assuming Fixed rates

monthly repayment remain the same – assuming Fixed rates     Principal Balance    
   

Principal Balance

 
 

2,400,000.00

Interest

Principal

Monthly Repayment

Month 1

2,396,628.85

19,000.00

3,371.15

22,371.15

Month 2

2,393,231.01

18,973.31

3,397.84

22,371.15

Month 3

2,389,806.28

18,946.41

3,424.74

22,371.15

Month 4

2,386,354.43

18,919.30

3,451.85

22,371.15

Month 5

2,382,875.25

18,891.97

3,479.18

22,371.15

Month 6

2,379,368.53

18,864.43

3,506.72

22,371.15

Month 7

2,375,834.05

18,836.67

3,534.48

22,371.15

Month 8

2,372,271.59

18,808.69

3,562.46

22,371.15

Month 9

2,368,680.93

18,780.48

3,590.67

22,371.15

Month 10

2,365,061.83

18,752.06

3,619.09

22,371.15

Month 11

2,361,414.09

18,723.41

3,647.74

22,371.15

Month 12

2,357,737.47

18,694.53

3,676.62

22,371.15

Month 229

255,135.18

2,019.82

20,351.33

22,371.15

Month 230

234,783.85

1,858.71

20,512.44

22,371.15

Month 231

214,271.41

1,696.32

20,674.83

22,371.15

Month 232

193,596.57

1,532.64

20,838.51

22,371.15

Month 233

172,758.07

1,367.67

21,003.48

22,371.15

Month 234

151,754.59

1,201.39

21,169.76

22,371.15

Month 235

130,584.83

1,033.80

21,337.35

22,371.15

Month 236

109,247.48

864.88

21,506.27

22,371.15

Month 237

87,741.20

694.62

21,676.53

22,371.15

Month 238

66,064.67

523.01

21,848.14

22,371.15

Month 239

44,216.54

350.05

22,021.10

22,371.15

Month 240

22,195.43

175.71

22,195.43

22,371.15

350.05 22,021.10 22,371.15 Month 240 22,195.43 175.71 22,195.43 22,371.15 8 Debt Capital Markets
350.05 22,021.10 22,371.15 Month 240 22,195.43 175.71 22,195.43 22,371.15 8 Debt Capital Markets
8 Debt Capital Markets
8
Debt Capital Markets
Mortgage Amortisation Profile
Mortgage Amortisation Profile

25,000.00

20,000.00

15,000.00

10,000.00

5,000.00

-

P rincipal and Interest Am ortisation In te re st Principal Monthly Amount 1 17
P rincipal and Interest Am ortisation
In te re st
Principal
Monthly Amount
1
17
33
49
65
81
97
113
129 145 161
177 193
209 225

• Financing Institution’s profits are normally front-ended as the bulk of interest is paid within the first 10 years – depending on term of loan

nded as the bulk of interest is paid within the first 10 years – depending on
nded as the bulk of interest is paid within the first 10 years – depending on
nded as the bulk of interest is paid within the first 10 years – depending on
9 Debt Capital Markets
9
Debt Capital Markets
Global View of Mortgage Market
Global View of Mortgage Market

• Mortgages have existed globally in one form or the other for centuries

• However, in Sub-Saharan Africa, only South Africa, Namibia, and recently Kenya to some extent can really boast of a vibrant mortgage market

• Most countries across the sub-region are beginning to develop the necessary criterion to begin a market

• This is due to the importance we are all now realising of the correlation between having mortgage markets and a middle class

• This is due to the leverage they provide to individuals to increase their wealth

class • This is due to the leverage they provid e to individuals to increase their
class • This is due to the leverage they provid e to individuals to increase their
class • This is due to the leverage they provid e to individuals to increase their
10 Debt Capital Markets
10
Debt Capital Markets
US Debt Securities Issuance
US Debt Securities Issuance
M unic ipal T o ta l is s u a n c e o
M
unic ipal
T o ta l
is s u a n c e
o f
d e b t
s e c u ritie s
-
U S
M a rk e ts
U
S Treas ury
R elated
M
ortgage
$6000.00bn
C
orporate
F
ed A genc ies
$5000.00bn
M
oney
M ark et
sset B acked
A
$4000.00bn
$3000.00bn
$2000.00bn
$1000.00bn
$0.00bn
• Exponential increase in the issuance of Mortgage Backed Securities as depicted above
De c-8
De 5 c-8 De 6 c-8 De 7 c-8 De 8 c-8 De 9 c-9 De 0 c-9 De 1 c-9 De 2 c-9 De 3 c-9 De 4 c-9 De 5 c-9 De 6 c-9 De 7 c-9 De 8 c-9 De 9 c-0 De 0 c-0 De 1 c-0 De 2 c-0 De 3 c-0 Mar-05
4
4 c-9 De 5 c-9 De 6 c-9 De 7 c-9 De 8 c-9 De 9
4 c-9 De 5 c-9 De 6 c-9 De 7 c-9 De 8 c-9 De 9
4 c-9 De 5 c-9 De 6 c-9 De 7 c-9 De 8 c-9 De 9
11 Debt Capital Markets
11
Debt Capital Markets
Debt Securities Issuance by Agency
Debt Securities Issuance by Agency
O u ts ta n d in g V o lu m e o f
O u ts ta n d in g
V o lu m e
o f
A g e n c y
M B S
$4000.00bn
$3500.00bn
$3000.00bn
$2500.00bn
$2000.00bn
$1500.00bn
$1000.00bn
$500.00bn
$0.00bn
De c-8
0
De c-8
1
Dec-8
2
Dec-8
3
Dec-8
4
De c-8
5
De c-8
6
Dec-8
7
Dec-8
8
Dec-8
9
Dec-9
0
De
c-9
1
Dec-9
2
Dec-9
3
Dec-9
4
Dec-9
5
De
c-9
6
Dec-9
7
Dec-9
8
Dec-9
9
Dec-0
0
De c-0
1
De
c-0
2
Dec-0
3
Dec-0
4

GNMAFNMA FHLM C Total

FNMAGNMA FHLM C Total

FHLM CGNMA FNMA Total

TotalGNMA FNMA FHLM C

• Exponential increase in the issuance in all Agency Mortgage Backed Securities as depicted above

increase in the issu ance in all Agency Mortgage B acked Securities as depicted above 12
increase in the issu ance in all Agency Mortgage B acked Securities as depicted above 12
increase in the issu ance in all Agency Mortgage B acked Securities as depicted above 12
12 Debt Capital Markets
12
Debt Capital Markets
Positive Effects of Leverage
Positive Effects of Leverage
Positive Effects of Leverage • An example of the benefits to home buyers of using mortgage

• An example of the benefits to home buyers of using mortgage financing and its effect on individual RoE

• 1333% RoE higher than if 100% equity

mortgage financing and its effect on individual RoE • 1333% RoE higher than if 100% equity
mortgage financing and its effect on individual RoE • 1333% RoE higher than if 100% equity
mortgage financing and its effect on individual RoE • 1333% RoE higher than if 100% equity
13 Debt Capital Markets
13
Debt Capital Markets
Types of Mortgages

Types of Mortgages

Types of Mortgages
Types of Mortgages

Fixed Rate Mortgages (Fully Amortising)

• Fixed rate coupon for the life of the mortgage

• Repayments remain the same for the life of the mortgage

• Generally available where you have a capital

• Financing via the capital markets can be complex for hedging reasons

• Interest rate risk is borne by financing institution

market

be complex for hedging reasons • Interest rate risk is borne by financing institution market 15
be complex for hedging reasons • Interest rate risk is borne by financing institution market 15
be complex for hedging reasons • Interest rate risk is borne by financing institution market 15
15 Debt Capital Markets
15
Debt Capital Markets
Types of Mortgages
Types of Mortgages

Variable Rate Mortgages (Fully Amortising)

• Repayments can vary throughout the life of the mortgage

• Interest rate risk is borne by the mortgagor

• Generally easy to finance via the capital markets

• Easier to fund even via financing institution’s balance sheet

via the capital markets • Easier to fund even via financing institution’s balance sheet 16 Debt
via the capital markets • Easier to fund even via financing institution’s balance sheet 16 Debt
via the capital markets • Easier to fund even via financing institution’s balance sheet 16 Debt
16 Debt Capital Markets
16
Debt Capital Markets
Types of Mortgages
Types of Mortgages

Interest Only Mortgages

• Repayment of principal is via a balloon payment

• This could be via insurance or endowment policy or alternatively pension payout

• Lower payment obligations for the borrower

• Back ended risk

alternatively pension payout • Lower payment obligations for the borrower • Back ended risk 17 Debt
alternatively pension payout • Lower payment obligations for the borrower • Back ended risk 17 Debt
alternatively pension payout • Lower payment obligations for the borrower • Back ended risk 17 Debt
17 Debt Capital Markets
17
Debt Capital Markets
Types of Mortgages
Types of Mortgages

Flexible Mortgages

• Repayments can be variable

• Redraws are allowed

• Payment holidays are allowed

• Further advances allowed

• Interest net-off

are allowed • Payment holidays are allowed • Further advances allowed • Interest net-off 18 Debt
are allowed • Payment holidays are allowed • Further advances allowed • Interest net-off 18 Debt
are allowed • Payment holidays are allowed • Further advances allowed • Interest net-off 18 Debt
18 Debt Capital Markets
18
Debt Capital Markets
Types of Mortgages
Types of Mortgages

Combination Mortgages

• Balloon mortgages – fixed rate capped periods

• Refinancing risk borne by borrower

• Proved very popular with first-time buyers

periods • Refinancing risk borne by borrower • Proved very popular with first-time buyers 19 Debt
periods • Refinancing risk borne by borrower • Proved very popular with first-time buyers 19 Debt
periods • Refinancing risk borne by borrower • Proved very popular with first-time buyers 19 Debt
19 Debt Capital Markets
19
Debt Capital Markets
Categorisation of Mortgages
Categorisation of Mortgages

• Prime Mortgages

• Higher income earners

• No default history

• Verified Income

• Lower Loan-to-values

• Lower interest rates

• Sub-Prime Mortgages

• Lower income earners

• History of default / foreclosure

• Self certified income

• Higher Loan-to-values

• Higher interest rates

/ foreclosure • Self certified income • Higher Loan-to-values • Higher interest rates 20 Debt Capital
/ foreclosure • Self certified income • Higher Loan-to-values • Higher interest rates 20 Debt Capital
/ foreclosure • Self certified income • Higher Loan-to-values • Higher interest rates 20 Debt Capital
20 Debt Capital Markets
20
Debt Capital Markets
Improving Macroeconomic Stability
Improving Macroeconomic Stability

• Consistent economic growth – leading to the creation of jobs and economic prosperity

• Low inflation rates

• Low interest rates

• Stable exchange rates

• House price stability or better still, growth

Low interest rates • Stable exchange rates • House price stability or better still, growth 21
Low interest rates • Stable exchange rates • House price stability or better still, growth 21
Low interest rates • Stable exchange rates • House price stability or better still, growth 21
21 Debt Capital Markets
21
Debt Capital Markets
Mortgage Origination, Underwriting and Servicing

Mortgage Origination, Underwriting and Servicing

Mortgage Underwriting
Mortgage Underwriting

• Eligibility Criteria

• Maximum Loan-to-value

• Maximum Payment-to-Income ratio

• Applicant age

• Type of property

• Maximum Amount

• Minimum Amount

• Maximum Term

• Prepayment Penalties

• Location of property

• Life Insurance

• Building + contents insurance

• Mortgage Indemnity Guarantee insurance

• Verification of income and employment

• Credit Reports – Fair Isaac Scores (Credit Scoring)

Verification of income and employment • Credit Reports – Fair Isaac Scores (Credit Scoring) 23 Debt
Verification of income and employment • Credit Reports – Fair Isaac Scores (Credit Scoring) 23 Debt
Verification of income and employment • Credit Reports – Fair Isaac Scores (Credit Scoring) 23 Debt
23 Debt Capital Markets
23
Debt Capital Markets
Mortgage Origination
Mortgage Origination

Methods of originating mortgages - sales

• Direct Sales from branches / outlets

• Third party sales

• Call centers – including cold calling

• Internet

• Direct mail

• Mobile Phones – yes!

Call centers – including cold calling • Internet • Direct mail • Mobile Phones – yes!
Call centers – including cold calling • Internet • Direct mail • Mobile Phones – yes!
Call centers – including cold calling • Internet • Direct mail • Mobile Phones – yes!
24 Debt Capital Markets
24
Debt Capital Markets
Mortgage Origination Process
Mortgage Origination Process

• Completed Application Form

• Verification of :-

• Income

• Employment

• Stability of income

• Income / expenditure statement

• Property existence – location / independent valuation

• Title check and insurance

• Credit checks

• Property, Life, MIG and Insurance Details

• Borrower contribution – received and not borrowed

Life, MIG and Insurance Details • Borrower contribution – received and not borrowed 25 Debt Capital
Life, MIG and Insurance Details • Borrower contribution – received and not borrowed 25 Debt Capital
Life, MIG and Insurance Details • Borrower contribution – received and not borrowed 25 Debt Capital
25 Debt Capital Markets
25
Debt Capital Markets
Mortgage Servicing
Mortgage Servicing

• Perfection of Title – (Deed of Trust)

• Disbursement

• Collection Procedures :-

• Set-up standing order or direct debit instructions

• Verification of contact details – on-going

• Setting delinquency and charge-off buckets

– on-going • Setting delinquency and charge-off buckets » 30 days » 60 days » 90

» 30 days

» 60 days

» 90 days

» 180 days charge-off

delinquency and charge-off buckets » 30 days » 60 days » 90 days » 180 days
delinquency and charge-off buckets » 30 days » 60 days » 90 days » 180 days
26 Debt Capital Markets
26
Debt Capital Markets
Mortgage Servicing cont’
Mortgage Servicing cont’

• Need for an executable and transparent foreclosure process

• Generally speaking can be between 18 – 24mths (most countries)

foreclosure process • Generally speaking can be betw een 18 – 24mths (most countries) 27 Debt
foreclosure process • Generally speaking can be betw een 18 – 24mths (most countries) 27 Debt
foreclosure process • Generally speaking can be betw een 18 – 24mths (most countries) 27 Debt
27 Debt Capital Markets
27
Debt Capital Markets
Key Administrative Issues
Key Administrative Issues

• Marketing, Origination and underwriting

Issues • Marketing, Origination and underwriting • Origination guidelines and/ or policies and procedures

• Origination guidelines and/or policies and procedures

• Underwriting guidelines and/or policies and procedures

• Quality control

• Risk Management – setting and monitoring of targets

• Assignment of MIG and other insurance policies

• Procedures for approval

• Corporate governance re: reporting and compensation structure of underwriting department

• Customer service

• Collections – incentive programs

• Automation and use of technology

• Staff experience and continuous training

• Work-out – reduction in timeline and incentive programs

• Tracking of performance – delinquencies, charge-offs, static pool analysis

• Disaster Recovery systems and back-up

• Cost of servicing a loan

• Number of loans serviced per employee

systems and back-up • Cost of servicing a loan • Number of loans serviced per employee
systems and back-up • Cost of servicing a loan • Number of loans serviced per employee
28 Debt Capital Markets
28
Debt Capital Markets
Post Origination, underwriting and servicing… How do you finance the portfolio on an evergreen basis

Post Origination, underwriting and servicing…

How do you finance the portfolio on an evergreen basis ?

Mortgage Financing Part 2 Transforming the dream into reality

Mortgage Financing Part 2

Transforming the dream into reality

How to Finance Mortgages
How to Finance Mortgages

• Core deposits

• Tier II Capital – issuance of 10yr non-call 5yr bonds – typical in the United Kingdom

• Warehouse and subsequent take-out financing

• Residential Mortgage Backed Securitisation

• Warehouse and subsequent take-out financing • Residential Mortgage Backed Securitisation 31 Debt Capital Markets
• Warehouse and subsequent take-out financing • Residential Mortgage Backed Securitisation 31 Debt Capital Markets
• Warehouse and subsequent take-out financing • Residential Mortgage Backed Securitisation 31 Debt Capital Markets
31 Debt Capital Markets
31
Debt Capital Markets
An Example of Traditional Bank Funding Sources
An Example of Traditional Bank Funding Sources
An Example of Traditional Bank Funding Sources • Traditionally, banks funded mortgages using co re deposits

• Traditionally, banks funded mortgages using core deposits however, to reduce asset/liability mismatch

• Banks funded mortgages with a combination of short term deposits and issuance of medium term debt

funded mortgages with a combination of short term deposits and issuance of medium term debt 32
funded mortgages with a combination of short term deposits and issuance of medium term debt 32
funded mortgages with a combination of short term deposits and issuance of medium term debt 32
32 Debt Capital Markets
32
Debt Capital Markets
Financial Intermediation
Financial Intermediation

• Origination of mortgages financed via funding from a warehouse line

• Mortgages are originated under a homogeneous criteria

• Draw-down of warehouse lines are repaid via a refinancing into longer term securities

• Longer term securities issued using securitisation

a refinancing into longer term securities • Longer term securities issued using securitisation 33 Debt Capital
a refinancing into longer term securities • Longer term securities issued using securitisation 33 Debt Capital
a refinancing into longer term securities • Longer term securities issued using securitisation 33 Debt Capital
33 Debt Capital Markets
33
Debt Capital Markets
A primer on Residential Mortgage Backed Securitisation

A primer on Residential Mortgage Backed Securitisation

Securitisation
Securitisation

What is Securitisation ?

• Securitisation is the raising of debt secured on the cashflow and/or collateral value of a selected pool of assets

• Securitisation debt is non-recourse to the originator, so that investors depend solely on the performance of the assets and are insulated from the financial condition of the originator

the performance of the assets and are insulated fr om the financial condition of the originator
the performance of the assets and are insulated fr om the financial condition of the originator
the performance of the assets and are insulated fr om the financial condition of the originator
35 Debt Capital Markets
35
Debt Capital Markets
What is Securitisation cont’
What is Securitisation cont’

• Pure asset securitisation is generally achieved by legally and economically isolating the receivables / assets from the balance sheet of the originator

• This is achieved by what is commonly referred to as a “True Sale” of the assets or receivables

is achieved by what is commonly referred to as a “True Sale” of the assets or
is achieved by what is commonly referred to as a “True Sale” of the assets or
is achieved by what is commonly referred to as a “True Sale” of the assets or
36 Debt Capital Markets
36
Debt Capital Markets
Range of Debt Markets
Range of Debt Markets

Illiquid

Highly liquid

Range of Debt Markets I l l i q u i d Highly liquid Non tradable
Range of Debt Markets I l l i q u i d Highly liquid Non tradable
Non tradable Private Placements Tradable Private Placements Commercial Public Paper issue
Non tradable
Private Placements
Tradable
Private Placements
Commercial
Public
Paper
issue

Actively

Traded

bonds

Tradable Private Placements Commercial Public Paper issue Actively Traded bonds 37 Debt Capital Markets
Tradable Private Placements Commercial Public Paper issue Actively Traded bonds 37 Debt Capital Markets
37 Debt Capital Markets
37
Debt Capital Markets
Range of Assets
Range of Assets

• Generally, any asset that produces a certain level of predictable cashflow can be securitised

• Both short-term (e.g. trade credit ) and long-term (residential mortgages) can be securitised

• Even up to rights to receive flows – e.g. Airline ticket receivables etc

be securitised • Even up to rights to receive flows – e.g. Airline ticket receivables etc
be securitised • Even up to rights to receive flows – e.g. Airline ticket receivables etc
be securitised • Even up to rights to receive flows – e.g. Airline ticket receivables etc
38 Debt Capital Markets
38
Debt Capital Markets
Range of Assets cont’
Range of Assets cont’

• Examples of asset types that have been securitised

• Residential and Commercial Mortgages

• Auto / Equipment / Aircraft Leases

• Credit Card Receivables

• Auto and Consumer Loans

• Bank and Corporate Debt

• Trade Receivables

• Export and Domestic Corporate Receivables

• Air Ticket Receivables

• Workers Remittances

• Export and Domestic Corporate Receivables • Air Ticket Receivables • Workers Remittances 39 Debt Capital
• Export and Domestic Corporate Receivables • Air Ticket Receivables • Workers Remittances 39 Debt Capital
• Export and Domestic Corporate Receivables • Air Ticket Receivables • Workers Remittances 39 Debt Capital
39 Debt Capital Markets
39
Debt Capital Markets
Typical Structure of a Securitisation
Typical Structure of a Securitisation
SPV Special Purpose Issuing Vehicle Sale & Service of Receivables Seller, Servicer Assets Liabilities Assets
SPV
Special Purpose
Issuing Vehicle
Sale & Service of
Receivables
Seller, Servicer
Assets
Liabilities
Assets
Liabilities
Sr. ABS
(AAA)
Receivables
Purchase
Pool
Receivables
Receivables
Pool
Mezz. ABS
(BBB/BB)
Jr. ABS
(Equity)

Senior

Investors

Subordinated or Mezzanine Investor

Sell ABS

Sell ABS Debt Service Sell ABS

Debt Service

Sell ABS

or Mezzanine Investor Sell ABS Debt Service Sell ABS Debt Service Retain Residual Interest (First Loss)

Debt Service

Retain Residual Interest (First Loss)

Investor Sell ABS Debt Service Sell ABS Debt Service Retain Residual Interest (First Loss) 40 Debt
Investor Sell ABS Debt Service Sell ABS Debt Service Retain Residual Interest (First Loss) 40 Debt
Investor Sell ABS Debt Service Sell ABS Debt Service Retain Residual Interest (First Loss) 40 Debt
40 Debt Capital Markets
40
Debt Capital Markets
Key Elements of Securitisation
Key Elements of Securitisation

• In-depth knowledge of the assets

• Isolation / transfer of assets

• Servicing

• Credit Rating (Domestic or International)

• Legalese and Deal Documentation

• Placement

• Monitoring

(Domestic or International) • Legalese and Deal Documentation • Placement • Monitoring 41 Debt Capital Markets
(Domestic or International) • Legalese and Deal Documentation • Placement • Monitoring 41 Debt Capital Markets
(Domestic or International) • Legalese and Deal Documentation • Placement • Monitoring 41 Debt Capital Markets
41 Debt Capital Markets
41
Debt Capital Markets
Basic Transfer Mechanism
Basic Transfer Mechanism

Sale or Assignment

Basic Transfer Mechanism Sale or Assignment SPONSORING COMPANY Accounts Receivable SPECIAL PURPOSE VEHICLE ISSUES

SPONSORING COMPANY

Accounts Receivable SPECIAL PURPOSE VEHICLE ISSUES Accounts Receivable SECURITIES
Accounts
Receivable
SPECIAL PURPOSE
VEHICLE
ISSUES
Accounts
Receivable
SECURITIES

ASSET-BACKED

Receivable SPECIAL PURPOSE VEHICLE ISSUES Accounts Receivable SECURITIES ASSET-BACKED 42 Debt Capital Markets
Receivable SPECIAL PURPOSE VEHICLE ISSUES Accounts Receivable SECURITIES ASSET-BACKED 42 Debt Capital Markets
42 Debt Capital Markets
42
Debt Capital Markets
Methods of Asset Transfer
Methods of Asset Transfer

Novation – An arrangement that involves the termination of the existing contract and the writing of a new one

Sub-Participation Funded or Unfunded - Involves one party depositing monies which may only be repaid when the underlying assets pays or unfunded when the related loan is drawn or the the asset defaults

Assignment – Full transfer of the assets to the assignee

drawn or the the asset defaults • Assignment – Full transfer of the assets to the
drawn or the the asset defaults • Assignment – Full transfer of the assets to the
drawn or the the asset defaults • Assignment – Full transfer of the assets to the
43 Debt Capital Markets
43
Debt Capital Markets
Case Study UBA GROUP Securitise its Mortgages
Case Study
UBA GROUP Securitise its Mortgages

Some factors need to be in place before a securitisation can occur. Some of which

are:-

– Corporate commitment

– Management depth

– Track Record (Loan Administration)

– Internal systems (originating, servicing, and collection)

– Available and up to date information (company and collateral)

– Origination capacity

– Available and up to date info rmation (company and collateral) – Origination capacity 44 Debt
– Available and up to date info rmation (company and collateral) – Origination capacity 44 Debt
– Available and up to date info rmation (company and collateral) – Origination capacity 44 Debt
44 Debt Capital Markets
44
Debt Capital Markets
Initial Contract and Receivable
Initial Contract and Receivable

Other factors necessary are :-

– Clear and enforceable foreclosure Laws

– Enforceable eviction policies

– Ability to perfect interest quickly

– At least a 5 year fixed rate government curve – the longer the better

– Electronic payment systems e.g. direct debits

govern ment curve – the longer the better – Electronic payment systems e.g. direct debits 45
govern ment curve – the longer the better – Electronic payment systems e.g. direct debits 45
govern ment curve – the longer the better – Electronic payment systems e.g. direct debits 45
45 Debt Capital Markets
45
Debt Capital Markets
Initial Contract and Receivable
Initial Contract and Receivable
Initial Contract and Receivable Homeowners With loans from UBA UBA Loan Agreement Principal & Interest 46

Homeowners With loans from UBA

UBA
UBA

Loan Agreement

Principal & Interest

and Receivable Homeowners With loans from UBA UBA Loan Agreement Principal & Interest 46 Debt Capital
and Receivable Homeowners With loans from UBA UBA Loan Agreement Principal & Interest 46 Debt Capital
46 Debt Capital Markets
46
Debt Capital Markets
Transfer of Receivables to SPV
Transfer of Receivables to SPV

Homeowners

UBA

Principal &

Interest

UBA Mortgage Receivables Funding Trust

proceeds

proceeds

UBA Mortgage Receivables Funding Trust proceeds proceeds Investors Sale of Assets Mortgage Backed Securities 47 Debt

Investors

Receivables Funding Trust proceeds proceeds Investors Sale of Assets Mortgage Backed Securities 47 Debt Capital
Receivables Funding Trust proceeds proceeds Investors Sale of Assets Mortgage Backed Securities 47 Debt Capital

Sale of Assets

Receivables Funding Trust proceeds proceeds Investors Sale of Assets Mortgage Backed Securities 47 Debt Capital Markets

Mortgage Backed

Securities

Receivables Funding Trust proceeds proceeds Investors Sale of Assets Mortgage Backed Securities 47 Debt Capital Markets
Receivables Funding Trust proceeds proceeds Investors Sale of Assets Mortgage Backed Securities 47 Debt Capital Markets
Receivables Funding Trust proceeds proceeds Investors Sale of Assets Mortgage Backed Securities 47 Debt Capital Markets
47 Debt Capital Markets
47
Debt Capital Markets
Independent Trustee appointed & reallocation of cashflow
Independent Trustee appointed & reallocation of
cashflow
Homeowners Trustee Principal & Interest Principal & Interest proceeds proceeds UBA UBA Mortgage
Homeowners
Trustee
Principal &
Interest
Principal &
Interest
proceeds
proceeds
UBA
UBA Mortgage
Receivables
Funding Trust - A
Investors
Mortgage Backed
Sale of Assets
Mortgage Receivables Funding Trust - A Investors Mortgage Backed Sale of Assets Securities 48 Debt Capital

Securities

Mortgage Receivables Funding Trust - A Investors Mortgage Backed Sale of Assets Securities 48 Debt Capital
Mortgage Receivables Funding Trust - A Investors Mortgage Backed Sale of Assets Securities 48 Debt Capital
48 Debt Capital Markets
48
Debt Capital Markets
Allocation of Excess Spread
Allocation of Excess Spread
Homeowners Trustee Principal & Interest Interest proceeds UBA UBA Mortgage Receivables Funding Trust - A
Homeowners
Trustee
Principal &
Interest
Interest
proceeds
UBA
UBA Mortgage
Receivables
Funding Trust - A
Sale of Assets

Principal &

proceeds

Funding Trust - A Sale of Assets Principal & proceeds Investors Mortgage Backed Securities Excess Spread

Investors

Trust - A Sale of Assets Principal & proceeds Investors Mortgage Backed Securities Excess Spread +

Mortgage Backed

Securities

Excess Spread + Servicing Fees

Principal & proceeds Investors Mortgage Backed Securities Excess Spread + Servicing Fees 49 Debt Capital Markets
Principal & proceeds Investors Mortgage Backed Securities Excess Spread + Servicing Fees 49 Debt Capital Markets
Principal & proceeds Investors Mortgage Backed Securities Excess Spread + Servicing Fees 49 Debt Capital Markets
49 Debt Capital Markets
49
Debt Capital Markets
Introduction of a Swap counter-party and Guarantor
Introduction of a Swap counter-party and Guarantor
Homeowners Trustee Principal & Interest Interest proceeds UBA UBA Mortgage Receivables Funding Trust - A
Homeowners
Trustee
Principal &
Interest
Interest
proceeds
UBA
UBA Mortgage
Receivables
Funding Trust - A
Sale of Assets
Swap
Counter party

Excess Spread + Servicing Fees

Principal &

proceeds

Excess Spread + Servicing Fees Principal & proceeds Investors Mortgage Backed Securities Financial Guarantor
Excess Spread + Servicing Fees Principal & proceeds Investors Mortgage Backed Securities Financial Guarantor

Investors

Mortgage Backed

Securities

Financial

Guarantor

Fees Principal & proceeds Investors Mortgage Backed Securities Financial Guarantor 50 Debt Capital Markets
Fees Principal & proceeds Investors Mortgage Backed Securities Financial Guarantor 50 Debt Capital Markets
Fees Principal & proceeds Investors Mortgage Backed Securities Financial Guarantor 50 Debt Capital Markets
50 Debt Capital Markets
50
Debt Capital Markets
Other form of Credit Enhancement considered
Other form of Credit Enhancement considered
Homeowners Trustee Principal & Interest Interest proceeds UBA UBA Mortgage Receivables Funding Trust - A
Homeowners
Trustee
Principal &
Interest
Interest
proceeds
UBA
UBA Mortgage
Receivables
Funding Trust - A
Sale of Assets
Swap
Counter party

Excess Spread + Servicing Fees

Principal &

party Excess Spread + Servicing Fees Principal & proceeds Investors Mortgage Backed Financial Guarantor

proceeds

Excess Spread + Servicing Fees Principal & proceeds Investors Mortgage Backed Financial Guarantor Securities 51

Investors

Spread + Servicing Fees Principal & proceeds Investors Mortgage Backed Financial Guarantor Securities 51 Debt

Mortgage Backed

Financial Guarantor
Financial
Guarantor

Securities

Servicing Fees Principal & proceeds Investors Mortgage Backed Financial Guarantor Securities 51 Debt Capital Markets
Servicing Fees Principal & proceeds Investors Mortgage Backed Financial Guarantor Securities 51 Debt Capital Markets
51 Debt Capital Markets
51
Debt Capital Markets
Use of Senior/subordinated Structure
Use of Senior/subordinated Structure
Homeowners Trustee Principal & Interest Interest proceeds UBA UBA Mortgage Receivables Funding Trust - A
Homeowners
Trustee
Principal &
Interest
Interest
proceeds
UBA
UBA Mortgage
Receivables
Funding Trust - A
Sale of Assets
Swap
Counter party

Excess Spread + Servicing Fees

Principal &

party Excess Spread + Servicing Fees Principal & proceeds Investors AAA Senior BBB Mezzanine

proceeds

Excess Spread + Servicing Fees Principal & proceeds Investors AAA Senior BBB Mezzanine Equity
Excess Spread + Servicing Fees Principal & proceeds Investors AAA Senior BBB Mezzanine Equity

Investors

AAA

Senior

BBB

Mezzanine

Equity

Mortgage Backed

Securities

proceeds Investors AAA Senior BBB Mezzanine Equity Mortgage Backed Securities 52 Debt Capital Markets
proceeds Investors AAA Senior BBB Mezzanine Equity Mortgage Backed Securities 52 Debt Capital Markets
52 Debt Capital Markets
52
Debt Capital Markets
Senior Subordinate Structure
Senior Subordinate Structure

• This is the most common kind of structure /credit enhancement for the following reasons :-

– Internal credit enhancement and therefore, generally speaking, the cheapest form of credit enhancement

– However, the ability to calculate the expected loss of each tranche and size and size the required credit enhancement is imperative

– The adviser and rating agency is usually responsible for this work

enhancement is imperative – The adviser and rating agency is usually responsible for this work 53
enhancement is imperative – The adviser and rating agency is usually responsible for this work 53
enhancement is imperative – The adviser and rating agency is usually responsible for this work 53
53 Debt Capital Markets
53
Debt Capital Markets
Typical Senior/Sub structure example
Typical Senior/Sub structure example
Typical Senior/Sub structure example • As noted above, the cost of funding to the issu er

• As noted above, the cost of funding to the issuer is close to the interest rate of the AAA bond

As noted above, the cost of funding to the issu er is close to the interest
As noted above, the cost of funding to the issu er is close to the interest
As noted above, the cost of funding to the issu er is close to the interest
54 Debt Capital Markets
54
Debt Capital Markets
Legal, Regulatory and Taxation Issues

Legal, Regulatory and Taxation Issues

Legal and Regulatory
Legal and Regulatory

• Legal

• Asset Transfer

• The Special Purpose Entity or Vehicle

• Bankruptcy Remoteness

• Regulation

• Taxation

• Stamp Duty / Transfer

Entity or Vehicle • Bankruptcy Remoteness • Regulation • Taxation • Stamp Duty / Transfer 56
Entity or Vehicle • Bankruptcy Remoteness • Regulation • Taxation • Stamp Duty / Transfer 56
Entity or Vehicle • Bankruptcy Remoteness • Regulation • Taxation • Stamp Duty / Transfer 56
56 Debt Capital Markets
56
Debt Capital Markets
Conditions for True Sale
Conditions for True Sale

• Transfer must be a true sale, or its legal equivalent. If originator is only pledging the assets to secure a debt, then it becomes a collaterised financing in which the originator would stay directly indebted to investor

• The assets must be owned by a special purpose entity, whose ownership of the sold assets will in all probability survive the bankruptcy of the originator/seller

• Actual ownership of the special purpose vehicle must be independent of the originator

• Actual ownership of the special purpose vehi cle must be independent of the originator 57
• Actual ownership of the special purpose vehi cle must be independent of the originator 57
• Actual ownership of the special purpose vehi cle must be independent of the originator 57
57 Debt Capital Markets
57
Debt Capital Markets
Confirmation of a asset sale
Confirmation of a asset sale

• The treatment and form of the transaction

• The influence the seller has on the assets after the sale

• The extent and nature of benefits transferred via the sale

• The purchase price

• Notification (if necessary) to underlying borrowers when assets are sold

• Title ownership

• Notification (if necessary) to underl ying borrowers when assets are sold • Title ownership 58
• Notification (if necessary) to underl ying borrowers when assets are sold • Title ownership 58
• Notification (if necessary) to underl ying borrowers when assets are sold • Title ownership 58
58 Debt Capital Markets
58
Debt Capital Markets
The Special Purpose Vehicle
The Special Purpose Vehicle

• Generally set up by the originator with ownership vested in a charitable trust

• Commonly set up in tax havens

• Mauritius

• Cayman Islands

• Jersey

• Apart from legally isolating the assets it also helps to avoid double taxation and hence reduce the expenses (if any) of the trust

• Cost of set-up an SPV is low

taxation and hence reduce the expenses (if any) of the trust • Cost of set-up an
taxation and hence reduce the expenses (if any) of the trust • Cost of set-up an
taxation and hence reduce the expenses (if any) of the trust • Cost of set-up an
59 Debt Capital Markets
59
Debt Capital Markets
Why Bankruptcy Remote
Why Bankruptcy Remote

• Only assets in the SPV are available to protect and pay investors

• No need for protection from creditors

• All obligations are limited to those available from the assets

• No recourse to the originator

• The vehicle can only receive the assets as purchased and issue notes or certificates

• Hence, probability of Bankruptcy is remote

as purchased and issue notes or certificates • Hence, probability of Bankruptcy is remote 60 Debt
as purchased and issue notes or certificates • Hence, probability of Bankruptcy is remote 60 Debt
as purchased and issue notes or certificates • Hence, probability of Bankruptcy is remote 60 Debt
60 Debt Capital Markets
60
Debt Capital Markets
Regulation
Regulation

• Bank Regulators will place a strong emphasis on the the amount of regulatory capital accorded to the transaction

• For instance, regulators in certain countries will insist that issuing bank hold 100% Risk Weighted Capital to Equity portion of the transaction *

• This will differ from country to country and will normally be defined by the securitisation laws of the country

• *FASB 46 …? Consolidation of VIEs - Somewhat mitigated by QSPE under FAS 140

the country • *FASB 46 …? Consolidation of VIEs - S omewhat mitigated by QSPE under
the country • *FASB 46 …? Consolidation of VIEs - S omewhat mitigated by QSPE under
the country • *FASB 46 …? Consolidation of VIEs - S omewhat mitigated by QSPE under
61 Debt Capital Markets
61
Debt Capital Markets
Current Basel II Proposals
Current Basel II Proposals
Current Basel II Proposals • Strong incentive for banks to issue or invest in higher rated

• Strong incentive for banks to issue or invest in higher rated debt given the penal capital weights allocable to bonds below investment grade

in higher rated debt given the penal capital wei ghts allocable to bonds below investment grade
in higher rated debt given the penal capital wei ghts allocable to bonds below investment grade
in higher rated debt given the penal capital wei ghts allocable to bonds below investment grade
62 Debt Capital Markets
62
Debt Capital Markets
SPV Taxation
SPV Taxation

• Generally speaking, the Special purpose Entities are carefully structured to ensure that its income is offset by its expenses so that little or no tax is incurred

• Tax incentives are however provided to special assets classes – e.g. most countries exempt the transfer of mortgages from Stamp Duty

special assets classes – e.g. most countries exempt the transfer of mortgages from Stamp Duty 63
special assets classes – e.g. most countries exempt the transfer of mortgages from Stamp Duty 63
special assets classes – e.g. most countries exempt the transfer of mortgages from Stamp Duty 63
63 Debt Capital Markets
63
Debt Capital Markets
Current Market Constraints & Some Suggestions

Current Market Constraints

&

Some Suggestions

Primary Mortgage Market Key Current Constraints
Primary Mortgage Market Key Current Constraints

• Lack of long term domestic currency denominated debt

• Difficultly in implementing the current foreclosure law

• Lengthy title perfection process

• Governor’s consent

• Multiple and expensive stamp duty rates (especially at state level)

• Monetary and fiscal volatility

• Lack of mortgage-able properties

• Weak or non-existent underwriting skills

• No government incentives at the primary mortgage level

or non-existent underwriting skills • No government incentives at the primary mortgage level 65 Debt Capital
or non-existent underwriting skills • No government incentives at the primary mortgage level 65 Debt Capital
or non-existent underwriting skills • No government incentives at the primary mortgage level 65 Debt Capital
65 Debt Capital Markets
65
Debt Capital Markets
Practical Solutions
Practical Solutions

• Issuance of long term debt by banks to manage the asset-liability mis-match.

• Adopt new foreclosure law and implementation – Ethiopian model – Give notice in papers and to individuals after the charge-off period

• Titling process to be re-engineered – removal of governors consent is critical

• Universal stamp duty rate – only applicable on the primary sale of residential or commercial property

• Continued fiscal and monetary discipline by the authorities

or commercial property • Continued fiscal and monetary discipline by the authorities 66 Debt Capital Markets
or commercial property • Continued fiscal and monetary discipline by the authorities 66 Debt Capital Markets
or commercial property • Continued fiscal and monetary discipline by the authorities 66 Debt Capital Markets
66 Debt Capital Markets
66
Debt Capital Markets
Practical Solutions cont’
Practical Solutions cont’

• Empower National builders association to have stringent standards. Key is to improve build quality of homes secured by long term mortgages – (Implications for foreclosure costs)

• Tax relief on mortgage interest payments

• Eradication of multiple stamp duty rates and the reduction in current rate on residential property sale

• Increased capacity, technical assistance and training

– Credit underwriting and systems

– Collections (wide spread direct debit accounts) / Monitoring

– Recovery – REO properties

– Collections (wide spread dir ect debit accounts) / Monitoring – Recovery – REO properties 67
– Collections (wide spread dir ect debit accounts) / Monitoring – Recovery – REO properties 67
– Collections (wide spread dir ect debit accounts) / Monitoring – Recovery – REO properties 67
67 Debt Capital Markets
67
Debt Capital Markets
Implementation cont’
Implementation cont’

• We need to propose a new foreclosure law similar to that of the Ethiopian model. The advantage of this is also public persona issues.

• Alternatively, implement property courts in all states – similar to that practiced in say Pakistan

• In summary there are many models available to choose from worldwide

• Key to this, is the need to implement a fast, efficient and transparent process that works for the country

is the need to implement a fast, efficient and transparent process that works for the country
is the need to implement a fast, efficient and transparent process that works for the country
is the need to implement a fast, efficient and transparent process that works for the country
68 Debt Capital Markets
68
Debt Capital Markets
Implementation cont’
Implementation cont’

• We need to execute the re-engineering of the current tilting process – key sticking point will be the governor’s consent issue.

• We need to execute the removal of multiple stamp duty and the lowering of the rate. This can be encompassed in the new titling regulation or appropriate regulation

of the rate. This can be encompassed in the new titling re gulation or appropriate regulation
of the rate. This can be encompassed in the new titling re gulation or appropriate regulation
of the rate. This can be encompassed in the new titling re gulation or appropriate regulation
69 Debt Capital Markets
69
Debt Capital Markets
Implementation cont’
Implementation cont’

• MoF and CBN to continue fiscal and monetary policies that impart discipline into the management of the economy going forward – We need to continue to lobby appropriate authorities

• National Home Builders Association to provide quality assurance to buyers and such buyers can sue a developer and/or association via the property court (to speedup procedure) for poor construction quality

and/or association via the property court (to speedup procedure) for poor construction quality 70 Debt Capital
and/or association via the property court (to speedup procedure) for poor construction quality 70 Debt Capital
and/or association via the property court (to speedup procedure) for poor construction quality 70 Debt Capital
70 Debt Capital Markets
70
Debt Capital Markets
Implementation cont’
Implementation cont’

• Banks and Non-Bank Financial Institutions to invest in Training, systems etc.

– Housing Finance courses

– Beef-up collections teams and systems – to minimise delinquencies and charge-offs

– Recovery teams to be put in place to reduce loss severity

– Research and data collection and monitoring teams to be put in place in preparation for future capital markets issuances

and mon itoring teams to be put in place in preparation for future capital markets issuances
and mon itoring teams to be put in place in preparation for future capital markets issuances
and mon itoring teams to be put in place in preparation for future capital markets issuances
71 Debt Capital Markets
71
Debt Capital Markets
Case Study - Housing Finance
Case Study - Housing Finance

Example

STAGE 1 provides mortgage loan Financial Intermediary Indiviual Initially, a financial intermediary provides a
STAGE 1
provides mortgage loan
Financial Intermediary
Indiviual
Initially, a financial intermediary provides a mortgage to an individual say at 80% LTV
The financial intermediary is more comfortable lending fully secured by the property
As the property and loan seasons, a relationship and credit payment history is built by the intermediary
STAGE 2
Consumer Loan
Financial Intermediary
Indiviual
Car Loan
Other types of Loans
Hence
Indiviual
Total Networth as a
result of term financing
availability
Indiviual
Total Networth without
term financing
availability
Conclusion

Pension Reforms that mobilize domestic long term capital can be a strong catalyst for sustainable growth

Reforms that mobilize domestic long term capital can be a strong catalyst for sustainable growth 72
Reforms that mobilize domestic long term capital can be a strong catalyst for sustainable growth 72
Reforms that mobilize domestic long term capital can be a strong catalyst for sustainable growth 72
72 Debt Capital Markets
72
Debt Capital Markets
Summary Key Obstacles and solutions
Summary Key Obstacles and solutions

• Foreclosure Law – to be reworked, committee in place

• High Stamp Duty rates – new regime to be advised & adopted

• Cumbersome Titling Process – to be re-engineered

• Governor’s Consent – to be discarded

• High interest rates – already being addressed via DMO

• Lack of long term money – already being addressed via DMO

• Government Yield Curve – already being addressed via DMO

• Securitisation Law for Nigeria – to be put in place, committee in place

addressed via DMO • Securitisation Law for Nigeria – to be put in place, committee in
addressed via DMO • Securitisation Law for Nigeria – to be put in place, committee in
addressed via DMO • Securitisation Law for Nigeria – to be put in place, committee in
73 Debt Capital Markets
73
Debt Capital Markets
We are getting there… Thank You

We are getting there… Thank You

Biography
Biography

Mr. Sonnie Ayere

Mr. Ayere has over 12 continuous years of solid Corporate and Structured Finance, Banking and Asset Management experience working with HSBC, Royal Bank of Scotland (formerly, NatWest), Sumitomo Mitsui Bank, Bank of Montreal Nesbitt Burns in London and the International Finance Corporation (The World Bank Group).

He began his structured finance career in 1997 when he joined the structured finance / securitization team of Sumitomo Mitsui Bank, London. He was part of the team that structured the first ever Japanese de-linked Balance Sheet Collaterised Loan Obligation securitisation – GBP1.4bn Aurora Funding. He was also responsible for managing the bank’s fixed income portfolio in ABS investments in other asset classes for the bank’s own balance sheet.

Following this, he joined BMO-Nesbitt Burns (the investment banking arm of the Bank of Montreal) London in 1998 as part of the team responsible for setting up a US$20bn Fixed Income Structured Investment Vehicle (“SIV”), with a US$2bn Capital Note Program which launched in 1999. He was involved in the company’s set up, compiling aspects of its procedures manual, system evaluation and testing and subsequently responsible for analyzing and investing in various ABS/MBS and other asset classes – bank subordinated debt and other corporate debt plus the on-going credit monitoring of the portfolio.

He joined the Global Structured Finance Group of the International Finance Corporation (The World Bank Group) in Washington DC in 2001 where he was responsible for originating structured finance and securitization transactions globally, notable transactions include IFC’s role as structuring investor in South Africa Home Loans first Residential Mortgage Backed ZAR 1bn Offering and structuring securities backed by Contracts-to-sale in the Philippines. Mr. Ayere assumed the role of Structured Finance Specialist for Sub-Saharan Africa in July 2002 and to date has been responsible for developing structured finance and securitization transactions and developing debt capital market instruments for the bank and its clients across the continent. In September, 2004 he also became co-head / sector lead for financial markets business development for Sub-Saharan Africa. Here, he was responsible for generating financial market investments across the region to includes US$ lines of credit to new and existing IFC relationship banks. He was also and continues to be a key adviser to the DMO on the development of the Nigerian Federal Government Debt Capital Markets

He joined UBA Group as Managing Director/CEO of UBA GLOBAL MARKETS, the combined investment banking subsidiary of the bank group in August, 2005

Mr. Ayere obtained an MA (Hons.) in Financial Economics from the University of Dundee – Scotland. He is an Alumni of City University Business School London (MBA) and London Business School (Corporate Finance Program).

University Business School London (MBA) and Londo n Business School (Corporate Finance Program). 75 Debt Capital
University Business School London (MBA) and Londo n Business School (Corporate Finance Program). 75 Debt Capital
University Business School London (MBA) and Londo n Business School (Corporate Finance Program). 75 Debt Capital
75 Debt Capital Markets
75
Debt Capital Markets