A commercial property-backed deal was being prepped in Malaysia as of press time. Singaporean real estate investment trust CapitaCommercial Trust, a subsidiary of property developer CapitaLand, will raise M$115 million ($30.95 million) through the Aragorn ABS SPV.
The deal will finance the acquisition of the Wisma Technip building in the Malaysian capital of Kuala Lumpur. Aseambankers will act as lead manager. The 11-story office building is fully occupied with a weighted average LTV of 52.2% and a debt service coverage ratio of 2.26 times. Technic Group, the multinational oil and gas engineering company, occupies 97% of the available space.
The transaction includes four tranches structured as seven-year bullets, featuring a call option that allows the borrower to redeem the bonds at any time. The M$60 million ($16.15 million) senior notes are rated AAA' by the Malaysian Rating Corp. Investors can also purchase M$10 million ($2.7 million) of AA-rated' notes, a M$20 million ($5.4 million) double-B' piece and the M$25 million ($6.7 million) A-rated' tranche.
When completed, it will be the 10th securitization tied to CapitaLand, but the first to finance assets outside Singapore. If successful, analysts believe the company will look to issue similar transactions in Malaysia and China.
Orix moving into mortgages
Elsewhere, one of Japan's biggest leasing firms, Orix Corp., is diversifying into the mortgage business. Orix has aligned itself with the state-run Government Housing Loan Corp., the country's largest issuer of mortgage-backed securities, to provide 35-year mortgages.
Orix said the Flat 35 fixed-rate loans will be offered at highly competitive rates. It expects to originate a portfolio worth 100 billion ($864.2 million) in the next 12 months. The mortgages will be available from banks and non-bank institutions. They will be purchased and repackaged into MBS offerings by GHLC.
In South Korea, the U.S. investment fund Lone Star is in trouble with regulators over violations of the country's asset-backed securities law. According to the Financial Supervisory Commission, the Lone Star subsidiary Hudson Advisors Korea is guilty of purchasing asset-backed bonds at prices below the fair market value.
Under current law, Hudson can't be punished for such an offense. The case has, however, prompted the FSC to begin working on revisions to the ABS law with the aim of preventing illegal activities in the future.
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