Category Investments

A new offering

09 August 2004 Angelo Coppola

(9.8.04) Absa, in conjunction with Negotiated Benefits Consultants (NBC), has introduced a R1bn provident-backed securitisation to provide home loans for more than 25 000 South Africans in the first issue of R500m.

Says Steve Booysen, CE of Absa Group: "The Absa/NBC project achieves sustainable competitive capital market funding whilst serving the needs of the lower-income groups."

Two classes of Notes were issued, Class A, rated AAA (zaf) and Class B rated BBB (zaf). The Class A, secured floating listed Notes were 3.5 over-subscribed.

The Class B Notes were all taken up by an asset manager given the small size and in line with current market practice. Both the Notes are listed on the Bond Exchange of South Africa and rated by Fitch.

The aim of the joint venture is to provide security for both homeowners and financiers. NBC Future Guard, the name given to the product, is unique in that home loans are secured by the homeowners' withdrawal benefits and not the house itself, which is the conventional approach.

NBC Future Guard will serve a market segment that does not meet the traditional criteria for home loans. The product is both affordable and accessible and provides the lower income market with bargaining power, all critical factors of low-income lending.

The loans can be used to buy, renovate or build a house in any area.

The NBC securitization transaction demonstrates that low income housing loans are viable and that capital market funding is accessible," says Annelies Jacobs, securitisation consultant at ACMB.

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