Drive, Ghabbour Auto’s (GB Auto) consumer finance and factoring subsidiary, has completed its second securitised bond offering, amounting to EGP 892m.
A source has revealed that the issuance comes as a positive indicator, given the company has managed to structure a favourable deal with bond holders having seniority over the subordinate tranches of receivables.
EGP 100m gain is expected off the back of the securitisation deal, which is likely to be announced soon, and which relate to Drive and GB Lease.
The source expects GB Auto to book a securitisation gain on account of the issuance. Proceeds from the transaction will be used to deleverage Drive’s balance sheet and unlock further opportunities of growth.
This comes as the company aims to invest heavily in the factoring business, with Drive already having a 19.4% market share in the factoring business as of October 2020.
The offering consists of three tranches, with the first receiving a rating of AA+, the second AA and third A by Middle East Rating & Investors Service (MERIS). The transaction, of which the first tranche consists of EGP 414.8m, is structured as a 13-month non-callable bond with a fixed coupon rate of 10.25% payable monthly.
The second tranche consists of an EGP 407.6m, 36-month callable bond with a fixed coupon rate of 10.65% payable monthly. The third tranche consists of an EGP69.6m, 48-month callable bond, with a fixed coupon rate of 11.05% payable monthly.
The securitisation deal will be completed through the bond’s issuer, SPV Capital Securitization, which is backed by a portfolio of receivables generated by Drive Finance.
The Commercial International Bank (CIB) acted as lead manager and global coordinator, and also as the book runner and underwriter. GB Capital borrows at fixed interest rates and lends predominantly at variable rates, with interest rates having dropped in recent times. GB Auto stands to gain on account of a lower discount rate applied on the underlying portfolio of receivables.
