In China, ABN Amro has become the latest foreign bank to sign a memorandum of understanding (MOU) with a Chinese entity, eager to exploit growing opportunities in the People's Republic.
The bank has aligned itself with Haitong Securities, a Shanghai-located securities firm and China's fourth largest brokerage. Analysts predict the move is a precursor to ABN buying a stake in the company.
Securitization is one of several business areas the two will look to develop, along with corporate financial advisory and cross-border capital raisings.
By creating a tie-up with a securities firm, ABN will be looking - at least as far as ABS goes - to assist corporate issuers as a means to gain market share. Several companies in China have already issued ABS deals using customer asset management plan structures (ASR, 06/05/06).
These deals are put together by securities firms, listed on various stock exchanges and officiated by the China Securities Regulatory Commission. They have also proved much more straightforward to issue than the official pilot deals, which are limited to financial institutions and regulated by the People's Bank of China and China Banking Regulatory Commission.
If the ABN Amro-Haitong arrangement proves successful, other foreign houses may follow suit. To date, most of the focus from overseas bank investors has been on forming joint ventures with Chinese banks.
Such arrangements could also lead to spin-off securitization opportunities - particularly in the residential mortgage sector - but these may not materialize until regulatory controls are eased.
Meanwhile, the Hong Kong and London-listed Standard Chartered Bank last week began marketing its second synthetic balance sheet CLO. Called Start II CLO, the deal -jointly led by StanChart and Lehman Brothers - is referenced to a $1.6 billion portfolio originated by the borrower.
Roadshows took place last week in major European cities, with focus turning to Asia this week. Pricing is expected around June 19.
StanChart completed its first offering via the Start facility last November. Deutsche Bank Securities was joint lead on the deal, linked to a $2 billion pool and listed on the Irish Stock Exchange (ASR, 11/28/05).
The transaction comprised five rated tranches with six-year maturities. Pricing varied from 45 basis points over Libor on the triple-A piece to 650 points for the double-B paper.
The publicly offered part of the upcoming deal will amount to $182.2 million. Again split into five tranches with ratings from triple-A to double-B, the notes are structured as five-year bullets.
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