Second Diversified Payment Rights Securitisation

21.05.2007

MDM Bank successfully established and launched the second debt issuance from a future flow diversified payment rights (“DPR”) securitization program, under a Rule144A/RegS offering, which consisted of a US$ 350 million Series 2007-A tranche (the “Series 2007-A Notes”), with a final maturity of 5 years and an average life of 2.5 years, rated Baa2 by Moody’s. The Notes were priced at par at US$ Libor +200bps.

This second program issue has a number of key aspects to it:

• The Notes are rated two notches higher than the Ba1 Senior Unsecured rating of MDM Bank
• MDM Bank’s debut DPR issuance into the Rule 144A markets was well received by investors and was oversubscribed
• As a result of the oversubscription, the transaction was upsized from an initial indication of US$250m to a final size of US$350m.

MDM Bank’s CFO, Andrey Ilyin, commented: “We are happy with the transaction terms, its rating and the broad distribution of securities.  In addition to our established investor base in Europe, we had good reception in the United States with investors there taking about 70% of the issue.”

James Walters, Head of EEMEA ABS at Dresdner Kleinwort, said: “After being Russia’s largest ABS issuer in 2006, MDM Bank has started 2007 with another successfully placed securitization to a host of new DPR investors, as well as to a number of accounts who invested in their debut DPR issuance.”

Fraser Malcolm, Head of ABS Syndicate at Dresdner Kleinwort, said, “This was the first DPR securitisation for MDM bank that could be marketed in both Europe and the US under 144A regulations. Consequently, demand for the deal was split between largely repeat European investors in the program and US domiciled investors who were new to the program, if not MDM Bank itself. After an extensive roadshow both in Europe and the US we built a strong book across both jurisdictions and ended up with around 20 investors participating in the deal. The deal priced in line with the initial guidance and strong demand meant that the amount was increased from the initial target size. This can definitely be considered as another highly successful foray into the structured capital markets for MDM.”

Dresdner Bank AG London Branch (“Dresdner Kleinwort”) was the sole arranger and bookrunner for the second issuance. The issuance is executed through the MDM DPR Finance Company S.A. (the “Issuer”), which is a special-purpose company incorporated under the laws of Luxembourg.

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