Japan is soon to see its first master trust structure, in another sign of the maturing of the country's securitization market.
Sumitomo affiliate, Quoq Inc., a provider of consumer loans - or so-called shopping loans - is working with its parent to structure a master trust program with a ceiling of 700 billion ($6.4 billion).
The initial transaction is expected in June and will be worth 40 billion. Investment bank Daiwa Securities S.B. Capital Markets will lead manage the first issue, which will be divided into seven tranches of senior notes, totaling 36 billion (rated triple-A) and seven tranches of mezzanine notes (rated single-A), a Sumitomo official said.
Quoq and Sumitomo believe that the master trust will cut issuance costs of each deal by half, compared to stand-alone deals, and reduce preparation time to as little as a month.
Master trust structures, which allow multiple issues from a single vehicle, are common in many markets, in particular the U.S. and Europe. Most credit card deals are issued out of master trusts and the concept has been extended for consumer asset transactions and MBS.
"Master trusts are very cost-effective structures," said Frederic Drevon, managing director for Asia Pacific structured finance at Moody's Investors Service. "So it would seem a natural move for the Japanese market."