Securitization of rights to payment under a services agreement
2017
Securitization
Key aspects
LECAP acted as legal counsel in connection with the issuance of bonds by OOO SFO Lokoservis Finans in the amount of RUB 4.373 billion. The bonds were issued as part of a securitization transaction involving rights to payment from the service customer under a long-term services agreement for locomotive maintenance entered into by OOO TMH-Service (originator).
The first example of Russian securitization (using a Russian SFO as the issuer) in which the asset consists of rights to payment under a single long-term contract
Full legal support for the project
The LECAP team structured and provided full legal support for the project, including interaction with the rating agency and all key participants in the securitization transaction, as well as preparation of the contractual and issuance documentation.
The transaction became the first example of Russian securitization (using a Russian SFO as the issuer) in which the asset consisted of rights to payment under a single contract — a locomotive maintenance services agreement entered into by OOO TMH-Service (originator).
Within the project, a number of new ideas and approaches were implemented for the first time in a securitization transaction.
Case features
Project features that required an individual approach and non-standard solutions
Practical issues
of originator-customer-SFO interaction
of originator-customer-SFO interaction
Separating interaction in technical and financial matters, and the need to identify the moment when the right to payment for services is “crystallized”
Among the credit enhancement
mechanisms
mechanisms
Originator’s guarantee in favor of the SFO and a guarantee-offer in favor of the bondholders
Portfolio quality monitoring
Taking into account the revolving nature) and a set of financial and information covenants, including:
with respect to the existence of defaults on the assets (rights to payment);
with respect to the provision of a package of documents relating to the new (revolving) rights to payment, including deadlines for providing copies thereof to the SFO and the trustee;
with respect to the ratio of existing and future claims within the portfolio of rights to payment (including criteria for minimum additional monthly assignments).
with respect to the existence of defaults on the assets (rights to payment);
with respect to the provision of a package of documents relating to the new (revolving) rights to payment, including deadlines for providing copies thereof to the SFO and the trustee;
with respect to the ratio of existing and future claims within the portfolio of rights to payment (including criteria for minimum additional monthly assignments).
A good example of an expanded
set of covenants
set of covenants
Grounds for early redemption — taking into account the features of the transaction structure and the asset: the necessary protection of investors’ interests.
Ecystem companies
that participated in the transaction
More detailsthat participated in the transaction
Key product modules used in implementing the project
All products