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. Last Updated: 07/27/2016

Moscow Bank Sells $179M of Mortgage-Backed Bonds

VIENNA -- Moskommertsbank, a commercial lender based in Moscow, sold $179 million of bonds backed by Russian home loans, according to Raiffeisen Zentralbank, which managed the sale with HSBC Holdings.

"This is a remarkable success in a tough market," Raiffeisen's head of investment banking Patrick Butler said Wednesday in an e-mail. "This deal marks one of the largest retail mortgage-backed securities transactions in Russia to date."

At least 35 bond and loan deals worldwide were canceled or restructured in the past five weeks because of credit market turmoil caused by losses in U.S. subprime mortgages. Moody's Investors Service on Wednesday said the slump in U.S. subprime loans gave "serious reasons to worry."

Vienna-based Raiffeisen and HSBC, Europe's largest bank by market value, managed the transaction for Moskommertsbank, which controls about $600 million of mortgages.

The securities were issued by Moscow Stars, a company set up to package the debt. Banks create mortgage-backed securities by pooling loans and selling them to investors as bonds. This allows them to raise capital more cheaply than they could through unsecured debt.

The bonds were sold in three portions with the top-rated piece ranked Baa2 by Moody's Investors Service, the second-lowest investment grade. The note matures in 2034 and pays interest of 7.07 percent.

Raiffeisen packaged and sold about 650 million euros ($856 million) of Eastern European and Russian debt securities in 2006 and has 750 million euros of new deals planned, Butler said in December.