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Activity picks up throughout Asia

Thai consumer finance company Siam Industrial Credit Co.'s THB4 billion ($100.4 million) auto-loan ABS, arranged by Standard Chartered, has been delayed and is now expected to close next week. The deal, Thailand's biggest domestic securitization to date, was initially scheduled to close May 12, but some investors need more time to get board level approval, according to sources close to the deal.

Elsewhere, activity in Taiwan is finally heating up, with a number of CDOs in the works. Local firm Capital Securities is self-arranging a NT$5 billion ($161.1 million) CBO backed by its own assets, while ABN AMRO is handling a NT$10 billion issue for E-Sun Bank, backed by a pool of structured bonds.

Those involved on both deals will file for approval with the Bureau of Monetary Affairs soon. As to which transaction gets the green light first, bankers report it depends on whom the banks have to deal with at the Bureau of Monetary Affairs, with some officials apparently more conducive to ABS than others.

Grand Cathay Securities is underwriting a CDO for the International Commercial Bank of China, while Lehman Brothers is putting together a deal for Taishin Financial Holdings. Taishin is also working with ABN AMRO on a NT$9.6 billion credit card ABS.

Deutsche Bank Securities is also reportedly working on a CBO with a major insurance company', although Deutsche Bank ABS bankers are not saying which one at this stage.

Assuming the Bureau of Monetary Affairs gives the go-ahead, dealmakers will lobby to make tax concessions on CBOs. Under the current rules, CBO investors are subject to two taxes: 6% on interest payments for asset-backed bonds plus a 10% withholding tax on the bonds that make up the underlying pool - the major reason why CBOs have yet to be issued in Taiwan thus far. Most, however, believe the government wants to facilitate the market and will exempt CBOs from withholding tax.

Over in the People's Republic of China, one of the two banks working on pilot ABS deals (see ASR 3/7/05) has set itself a sensible target timeframe by which to complete its transaction. China Development Bank, working with Lehman Brothers and accounting firm Deloitte & Touche to securitize up to Rmb10 billion ($1.2 billion) of infrastructure loans, says it hopes to complete the deal by the end of 2005.

With Chinese regulators particularly cautious on introducing new products into its domestic capital markets, neutrals feel the slow approach is the way to go. China Construction Bank, working on an Rmb10 billion MBS with Standard Chartered, hopes to launch its deal in June, though some observers feel a late summer release is more likely.

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