In what has been a quiet fortnight on the Asian securitization market, Japanese consumer finance company Hitachi Shinpan tested the waters with a deal backed by consumer loans.
Called HABS Corp., Series 2000-1, this was the first public deal in its asset class to use a master trust structure using Japanese Trust Law. The structure allows for additional receivables to be added to the pool for this deal as well as making it possible for Hitachi to issue future deals from the same vehicle.
ING Barings was brought in as arranger and lead manager on the transaction.
The underlying portfolio consists of around 35,000 unsecured loans worth around 140 billion. Many of the loans included are to Hitachi employers, and the average rate of interest charged on them is 29.1%.
The single tranche deal was rated Aa2 by Moody's Investors Service and AA by Fitch. The bonds have three year average lives and are priced at 85 basis points over three month U.S. Libor.
Credit enhancement will be provided by an unrated 1.85 billion ($20 million) subordinated tranche, to be held by Hitachi, excess spread and a cash reserve that will grow through the term of the deal.
In spite of the dearth of deals around, one rumor doing the rounds is that ING has found it difficult to generate interest in the transaction as a result of general investor skepticism. At this time, they are mainly looking to get as much triple-A paper as possible on their books. The slow response is not a reflection of the pricing, which is reasonable for the asset class.
