Banca Monte dei Paschi di Siena SpA Agrees to Sale Leaseback of 683 Italian Bank Branches

Bloomberg - November 8, 2010

Banca Monte dei Paschi di Siena SpA, the world’s oldest bank, is selling about 1.5 billion euros ($2.1 billion) of bonds bundling a loan on office properties.

Monte dei Paschi will offer the 20-year securities to its retail clients over the next six weeks, said a spokeswoman at the Siena-based lender, who declined to be identified under company policy. It plans to offer 130 million euros of mezzanine bonds to institutional investors, she said.

The transaction through Casaforte S.r.l. is backed by a commercial mortgage used by investors including Axa Assicurazion to buy 683 properties from Monte dei Paschi, Fitch Ratings said in a Nov. 5 report. The mortgage holder has agreed to pay interest and principal twice a year until 2030, Fitch said.

The notes are backed by a stream of interest and principal from the property loan throughout their life, instead of the standard structure where payment on the property loans is collected in a lump sum at maturity, said Giovanni Pini, a London-based analyst at BNP Paribas SA in London.

“The transaction is indicative of future possible deals,” Pini said. “Refinancing, which is the main issue of existing CMBS transactions, shouldn’t be a problem in this case.”

Just 10 of 48 European commercial mortgages maturing during the first eight months of the year were fully repaid at their due date, according to Standard & Poor’s data. Twenty-seven loans are in default or standstill, and nine have been extended.

The notes will pay a half-yearly coupon of 3 percent until 2012 and a floating rate of 1.05 percent more than the six-month euro interbank offered rate, or euribor, thereafter, according to a statement distributed by the Italian stock exchange. Sphere: Related Content