Issuance from Asia has been fairly quiet of late, but behind the scenes deal makers are busily putting the final touches on a series of high profile offerings out of China, Korea, Malaysia and Hong Kong.

Most of the focus is on China and the pilot ABS schemes by China Construction Bank and China Development Bank. A source connected to the China Construction's debut MBS offering - which could raise up to Rmb10 billion ($1.23 billion) - reported that the prep work has been completed, "but we are still waiting for one more tax ruling before it can be launched."

Bankers involved on China Development's Rmb5.3 billion infrastructure loan CLO have been quoted in local media saying that the deal's launch is most likely scheduled for the end of November, and by year-end at the latest.

Both China Construction and China Development, and their advisors, expected some delays on their offerings, particularly as the Chinese regulators typically take an ultra-cautious approach to introducing new capital markets products. Even so, the authorities are already working on formal guidelines for ABCP programs that, according to optimistic observers, could come into effect early next year.

The approval process for ABCP falls under the jurisdiction of the central bank, People's Bank of China. Issuing short-term ABCP, although not ideal in terms of matching maturities to an issuer's liabilities, is considered far simpler for local corporates than longer-term debt issues requiring the involvement of several regulatory bodies, including the National Development and Reform Commission and The State Council.

In fact, one of the main challenges for both China Construction and China Development was convincing 10 regulatory bodies to reach a consensus and approve the transactions. Conversely, China United Telecommunications - China's second largest mobile phone provider - was able to set up a conduit facility in no time at all, requiring approval from just one regulator.

The Rmb3.2 million facility, arranged by China International Capital Corp., was completed in September and listed on the Shanghai Stock Exchange. It looked particularly attractive to corporates, with the six-month paper pricing at 2.55% and one-year notes at 2.80%, well inside the 5% one-year loan rate charged by commercial banks (see ASR 9/12/05).

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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