BSEC - Bemo Securitisation SAL is a specialized
investment bank based in Beirut Lebanon. Core activities are focused
on structured finance and securitisation in the MENA region, serving
SME’s and financial institutions. Operating from the region,
BSEC is able to bridge the gap between local transactions and
the capital markets. Over the last 3 years the BSEC structuring
desk has developed significant competencies in arranging and structuring
cross border transactions within challenging jurisdictions. The
BSEC team has also developed recent expertise in Shariaa compliant
(Islamic) securitisations. BSEC is a wholly owned subsidiary of
the BEMO Banking Group operating in five different markets: Luxembourg,
France, Cyprus, Syria, and Lebanon. BEMO Bank is listed on the
Beirut Stock Exchange.
The market in Lebanon has witnessed the first two securitisation
transactions in the MENA region. The leading issue was a $6 million
esoteric securitisation deal that Bemo Securitisation (BSEC) structured
for Solidere, one of the ten largest real estate companies in
the region; as for the second, it was a $5 million Structured
Investment Vehicle (SIV) issuing 2 types of currency linked originated
notes, Bull and Bear, that are equally and inversely linked.
What made it easier for Lebanon, among other countries in the
region, is that in 1996, a “Trust Law” (Fiduciary)
was enacted, enabling the use of bankruptcy-remote vehicles in
securitisation transactions. Applying this law, instead of using
a French Fonds Commun des Créances or a Cayman Island SPV,
avoided huge costs.
I. Private deals: Traditional deals range from $5m to $200m
Local investment banks can usually structure these kinds of transactions
– actually only BSEC was able to close such deals - unlike
larger ones that appeal to international securitisation players.
The current trend consists of:
1) CMBS/Hotels
Despite its small size, the Lebanese market is offering presently
a great opportunity to Commercial Mortgage Backed Securities (CMBS)
deals, in a region that has maintained a relatively quiet attitude
towards securitisation in general. In fact, the booming commercial
real estate market and hotel business is very appealing to securitisation,
as well as the instalment of large retail companies like Carrefour
and BHV/Monoprix, Four Seasons, etc, offering the chance for CMBS
deals to take place. In addition, the huge demand for long-term
financing increased, combined with illiquidity and a sub-investment
grade sovereign rating, which makes this demand unsatisfied by
traditional bank funding.
2) SIV
This market has also shown to be quite interesting for SIVs due
to the fact that they usually are small-sized deals, and could
perform well because their main economic objective is to earn
a credit spread and liquidity premium while managing certain risks
like: credit default, interest rate volatility, currency volatility,
etc.
3) NPL
Nonetheless, current trends open as well a potential market for
non-performing loans securitisation (NPL), such as auto loans
and CDO. The main hurdle remains the 1956 Bank Secrecy Act and
Blind Pools might be a solution
II. Government related deals
Planning on reducing its debt, the Lebanese government who enacted
a Government Securitisation Law N.430/2002 dated June 2002, is
envisaging the securitisation of tobacco revenues. The studies
are still under way by Morgan Stanley and Credit Suisse First
Boston, and were supposed to due by end 2002. Yet, huge political
issues stood in the way of this deal, and its closing date was
postponed to end 2003. The government was also envisaging to securitise
fees from mobile phone operating licences. But the deal is not
closed yet and the discussions are still encountering further
delays. It is worth noting that these transactions should benefit
the government of about $2 billion.
We will update Securitizability.com visitors as the market progresses.
BIOGRAPHY OF COUNTRY WRITER
Iad H. Georges Boustany
Iad Boustany is a senior Vice President, chief executive officer
at Bemo Securitisation SAL. He has more than 7 years experience
in the structured finance/securitisation arena spread over a variety
of jurisdictions such as France, Luxemburg, Lebanon. Among the
more noteworthy ‘firsts’ he has been responsible for
are (i) the first locally originated, structured and underwritten
MENA securitisation, (ii) the first hybrid instrument in the MENA
region, (iii) the first credit scoring models for corporate and
consumer credit (individual and pool levels) in non-transparent
economies. He holds a Masters degree in Structured Finance (Ecole
Supérieure de Commerce de Paris), a BA in Applied Mathematics
(Université Paris X). He is a lecturer at Saint-Joseph
University, School of Management (Undergraduate and Graduate programs).
He is the author of “La Titrisation des Actifs”, LGDJ/Bruylant,
Paris and Brussels, 2003 (with N. Diab).
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