South Korea's Woori Bank confirmed last week that it is working with Merrill Lynch on a securitization of distressed loans. The two parties have established a joint venture SPV to dispose of around W45 billion ($44.2 million) of "precautionary" loans, defined as loans where interest payments have been delinquent for one to three months.
The venture will issue bonds ABS by collections on those loans. Officials at Merrill declined to offer details on potential timing of the issue, whether it will be a local currency offering or if it would be sold publicly or privately. Many rival bankers suggest Merrill will also act as sole investor for the bonds, a role it has fulfilled on other Korean securitizations in the past year.