The pace of Japanese asset-backed issues increased over the past two weeks, as issuers rushed to secure funding before the country's fiscal year-end in March. But commercial mortgage-backed transactions are rapidly cropping up, in addition to the usual loans and lease-backed deals that until now have been the mainstay of Japanese ABS.

Three commercial mortgage-backed securitizations were being marketed at press time, all of them private placements. As usual, all of the deals were sold to Japanese investors, reflecting the pricing advantage issuers enjoy in the domestic market.

The largest of these was a 30.7 billion ($277 million) transaction backed by the Tokyo headquarters of Japan Energy Corp. The five-year expected maturity issue by an SPC called AMCO Ventures Corp. comprised three series of fixed-rate notes rated by Moody's Investors Service: series A worth 22 million was rated Aaa; series B worth 4.4 billion was rated Aa2; and series C worth 4.3 billion was rated A2.

J.P. Morgan arranged the transaction, in which American International Group and Mitsui Fudosan, Japan's largest real estate developer, were the joint investors in the property. The deal overcame a major hurdle last spring when it was disclosed that the building's biggest tenant NTT Docomo planned to move out (ASRI 5/17/99 p.11).

Mitsui Fudosan was the originator of another smaller transaction, backed by the sale of residential condominiums built by the developer around Tokyo. The 10.5 billion issue by Millennium Residential SPC comprised two series of fixed-rate notes rated by Moody's: series A worth 9.5 billion was rated Aaa, and series B worth 1 billion was rated Aa2. Tokio Marine & Fire Insurance Co. guaranteed the transaction, and Sakura Securities was the arranger.

Finally, IBJ Securities was marketing a 11.5 billion securitization backed by rental income of five buildings owned by Dai-Ichi Mutual Life Insurance Co. The buildings, located in Tokyo, Nagoya and Osaka, were entrusted to Sumitomo Trust & Banking Co., which will issue trust certificates that will ultimately back the notes.

An SPC called Millennium Capital issued three classes of notes rated by Moody's: class A worth 7.7 billion was rated Aa2; class B worth 2.2 billion was rated A2; and class C worth 1.6 billion was rated Baa2.

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