EMEA structured finance issuance down 28% in 2008

Published: January 26, 2009

Structured finance markets are stagnating in the EMEA region, according to a new report from Moody’s, although some markets, such as Russia and UAE, are still growing.

The report notes that total structured finance issuance from eastern Europe, Middle East and Africa fell from US$7.7bn in 2007 to just US$5bn in 2008, a decline of 28%.

Moody’s says that this decrease was caused by challenging economic conditions, the credit crisis and the lack of investor demand. Fewer deals were closed and a less diverse range of assets were securitised.

However, some countries bucked the trend: "Russia and the United Arab Emirates (UAE) both exceeded their issuance totals for 2007, due to larger deals and innovative new structures. Six Russian transactions closed, including one backed by factoring receivables, which was the first time this asset class had been securitised in Russia," notes Daniel Mumzhiu, a Moody's assistant vice-president, analyst and author of the report.

EMEA new markets will face economic difficulties brought on by the credit crunch and liquidity crisis, but Moody’s expects that there will be some activity in 2009, such as increasing acceptance of structured notes by many central banks as collateral for purchase, as well as new opportunities such as the issuing of covered bonds in Russia, central and eastern Europe and Turkey.

Moreover, the ongoing innovations within Islamic and Sukuk financing are a further driver of potential securitisation activity. These factors will drive continued issuance from the new markets in EMEA in what is likely to be another challenging year.