|Mitigation of Sovereign Interference Risk:
||DPR transactions substantially mitigate foreign currency transfer and convertibility risk.
- Debt is issued abroad; and
- Cash flows and obligors of the debt are offshore, outside the control and the jurisdiction of Turkey.
|Potential Hedge Against Economic Downturn in Turkey:
||Due to nature of the DPR flows and the strong correlation with the country’s exports, DPRs tend to be countercyclical, performing strongly even during economic downturns.
|Piercing of the Sovereign Rating Ceiling:
||The off-shore nature of the SPV, the significant levels of overcollateralisation and robust structure allows DPR transactions to achieve a higher rating than the country ceiling.
DPR transactions are typically rated a few notches higher than the sovereign ceiling of Turkey.
||Predictable, identifiable cash flows originated through experienced originators.
||Early amortisation and mandatory repurchase triggers and ongoing performance monitoring.
Monitoring typically tends to be monthly and provides a granular breakdown of the remittances, and the performance against the transaction triggers/thresholds.
||DPR transactions rely on over-collateralisation to provide security to investors.
Debt Service Coveraage Ratio (DSCR) quantifies the over-collateralisation and is calculated as periodic DPR flows divided by the largest future principal and interest debt payment (Maximum Debt Service).
A new issuance would typically require a minimum DSCR of 15x to 20x of the Maximum Debt Service.
|Strong Track Record:
||Akbank DPR Programme benefits from an established track record of strong performance, as demonstrated by high over-collateralisation levels and strong external ratings.