After spending nearly two years in the pipeline, the second securitization from China Ocean Shipping (Group) Company (Cosco) has finally been issued.

The $300 million securitization is backed by future receivables generated in 11 different countries from Cosco's shipping operations in Europe and Asia. It was structured to mirror an earlier securitization done for Cosco that was launched in 1997, in which future receivables were sold through a Cayman Islands SPV to a master trust vehicle called Cosco (Cayman) Freight Collection Master Trust, which issued securities backed by the receivables.

The entire issue was privately rated and placed with a single U.S. institutional investor. Chase Securities arranged the transaction, which is the first major future flow to be completed in Asia since the start of the regional financial crisis in 1997.

The deal is a triumph for Chase, which won the mandate in November 1997. Market volatility in Asia was the main reason behind its long execution, said Paul Burke, Chase's head of global securitized finance in Asia.

"After the financial crisis in Asia, the investor market was understandably nervous about buying a transaction where the majority of obligors were Asian," he explained. And given that there were mandates for several future flows from Thailand, China and Korea which never surfaced, "what is more surprising is that Cosco did get done," he added.

The deal also had to cope with the downgrading of the first securitization by Moody's in March and of China's sovereign rating by Standard & Poor's in July. More recently, sources suggested that it had suffered a permanent setback after it failed to obtain a monoline wrap (ASRI, 8/9/99, p.2). "As Mark Twain once said, rumors of its death are greatly exaggerated," commented Burke.

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