South African Home Loans Presentation

1
Increasing Capital Flows to Africa Housing
Finance Models 30th September 2004 Securitisatio
n as a Methodology for Accessing the Capital
Markets by Simon Stockley
2
South African Mortgage Market Overview

• Sophisticated mature R300billion
• Dichotomous
• Dominated by Big 4 Banks
• Sound legal structure title foreclosure
• Wide margins no real competition
• No non bank lending
• Banks cash rich no shortage of capital

3
The SA mortgage market
Source SARB
South African Mortgage Market
Residential SA mortgage loans by lenders
Outstanding balance, R bns
Total R 307 bn
Source SARB DI900
Source SAHL
SAHLs registrations
R millions per month
Source Standard Bank
4
Traditional Bank Funding
Reserving Requirements
Loans To Public
Deposits
Bank
Margin 4 - 5

• Mismatch

• Dead Capital

• Contamination

5
SA Home Loans Securitisation Structure
Control
External Auditor
Independent Trustee
Senior Securities
Special Purpose Vehicle Trust
Loans To the Public
Institutional Investors
Public
Subordinated Securities
Purchase Securities
JIBAR Rate Plus 2.1
1.6 Yield pick up
Origination Management Fee 0.5
6
SAHL Legal Structure
7
Investment Structure
8
Thekwini 4 Summary
Rating
WAL
Tranching
Size of Issue
R2,500,000,000 Originator and Servicer SA
Home Loans (Pty) Ltd Standby Servicer
Standard Bank of SA (Home Loan
Division) Arranger Bookrunner Standard Bank
of SA (Corporate Investment
Banking) Substitution Period 2.5
years Final Legal Maturity 21 Nov
2029 Call Date 21
Nov 2009 Listing
BESA
In brief
Class A1 R 1,585 m JIBAR 0.39
4.18 to 5 yrs
AAA
Class A2 - R 643 m JIBAR 0.39
Class A3 R 107 m 10.34
5 yrs
Class B R 115 m JIBAR 1.00
A
BBB
Class C R 50 m JIBAR 2.10
Capital 0.6
Not rated
5 yrs
Additional Capital 0.5
9
Investor support to date
10
Securitisation Cost of Funds History
11
Why No Securitisation Prior to December 2001?

• Big is best
• Rating agencies
• Exposure to international markets
• Legal framework not securitisation friendly
• Little incentive for banks to securitise
• No ability to reinsure first loss position

12
Relative value
Source Standard Bank
13
SecuritisationA Practical Guide

• Size does count
• Quality of data
• Capital markets
• System reporting ability
• Time, money, personnel
• Timing Market conditions
• Ratings
• Pricing
• Build it they will come

14
Thank you.
Simon
Stockley
(Pty) Ltd
CEO - SA
Home Loans
Phone [phone]
Fax [phone]
Cell no 083 276 0068
e-mail
simons
_at_
sahomeloans
.com