Moody's has assigned a provisional rating of Aa2 to the repack notes issued by Emirates NBD Auto Financing, a leading auto loans provider and part of Emirates NBD, the biggest bank in the UAE by assets.

Emirates NBD Auto Financing is a repackaging of a portion of the of asset-backed notes issuance rated Aa2 from Emirates NBD Auto Finance, a true-sale securitisation of UAE auto loans from Emirates NBD, a statement said.

The underlying ABS Auto notes are issued by Emirates NBD Auto Finance, or the asset purchase company (APC), it added.

The entirety of the JY24,000,000,000 ($270 million) APC notes are expected to be purchased by the Japan Bank for International Cooperation (JBIC) which is the entity conducting international operations of the Japan Finance Corporation (JFC).

A JY10,000,000,000 portion of these APC notes is then expected to be sold to Emirates NBD Auto Financing. As part of this transaction, the repack notes are the issued from the vehicle described here Emirates NBD Auto Financing and ultimately wrapped by JBIC for international investors with a principal guarantee, the statement said.

The obligations of repack in respect of all amounts of principal under the repack notes will be unconditionally and irrevocably guaranteed by JBIC. This 'guarantee' will constitute a direct, unsecured and unconditional obligation of JBIC and such obligation will rank pari-passu with all other unsecured obligations of JBIC outstanding.

The repack note interest is not covered by the guarantee and as such there is a cash reserve equal to 1.65 per cent of the total outstanding balance of the receivables held by the APC on the closing date and expected to cover an estimated four months coupon and expenses, the statement said.

This is the maximum estimated period between the triggering of a call event and redemption under the guarantee.

Two events allow the guarantee to be invoked: (i) a trustee notice that a cash reserve shortfall (less than the amount described above) has occurred on the APC Notes (ii) occurrence of a repack event of default and a subsequent acceleration effected by the repack trustee. – TradeArabia News Service