While the year's work is effectively done for most of Asia's securitization professionals, those involved on the two Chinese pilot programs were working furiously last week to ensure the deals priced before Christmas. Both China Construction Bank, with its RMB3.1 billion ($383 million) RMBS, and China Development Bank's RMB4.2 billion infrastructure CLO were set for simultaneous launches on China's interbank securities market as of press time.
Standard Chartered arranged China Construction's transaction - called Jianyuan 2005-1 - while Lehman Brothers structured China Development's offering, called CDB 2005-1 CLO. With neither firm having local dealership licenses, domestic securities houses will handle placement.
While bankers involved were not prepared to discuss precise details of the respective transactions before launch, some details have emerged. Fitch Ratings, which gave technical assistance to local rating agency LianHe Ratings, revealed the underlying pool consists of 51 loans to 29 corporate borrowers, drawn mainly from the energy, telecommunications, utilities and transport sectors.
The deal features RMB2.924 billion of senior unsecured fixed-rate notes, assigned national ratings of double-A by LianHe, plus a RMB1.003 billion junior floating-rate piece, rated triple-B plus. Maturity for both tranches is July 2007.
"According to local media, the senior tranche was offered at 2.29% with the junior notes offering between 60 and 85 basis points over the one-year deposit rate, currently 2.25%. More than 70 investors were reported to have put in orders, sources said."
China Construction's three-year, RMB2.67 billion triple-A rated senior tranche is tipped to yield 100 to 110 points over the 20-day average of the seven-day repo rate, currently at 1.5561%. In addition, RMB203 million of single-A rated nine-year notes will be marketed at 150 to 170 basis points and RMB52.8 million of triple-B minus certificates will offer a 240to 260 point return over the repo rate.
Also in China, China United Telecommunications, which stole the thunder of China Construction and China Development with its RMB3.2 billion short-term ABS in September (ASR, 9/12/2005), is planning another raid on the market, sources say.
As was the case on its debut, China's second biggest mobile phone company is keen to tap revenues gleamed from leasing its network to a Hong Kong subsidiary. Unicom has again hired China International Capital Corp. as arranger on a RMB6 billion deal. Morgan Stanley is one of the largest shareholders in China International Capital with a 34.3% interest.
Sources report that Unicom is looking to issue one-year notes yielding 2.50% - inside the 2.80% coupon for the one-year notes on its previous deal, and closer to bank issued commercial paper.
Given the speed in which Unicom was able to complete its last transaction - plus the fact China's markets do not close over Christmas - the company could complete the deal before year-end.
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