Asset-backed issuance is finally showing signs of life in non-Japan Asia, where only a handful of global issues have been launched since the beginning of the year. Two private deals a CLO and a CBO were launched from Hong Kong, while Korea closed two landmark domestic transactions.

American Express Bank recently became the first to securitize revolving consumer loans in Hong Kong. The $200 million deal arranged by CIBC World Markets was issued through CIBC's asset-backed commercial paper conduit, Great Lakes Funding Capital Corp., which is rated P1 by Moody's and D1 by Duff & Phelps. Maturity of the paper ranges from seven to 270 days. Pricing details were undisclosed, though most of the issue was understood to have been placed in the U.S.

Another transaction, rated out of Hong Kong and arranged in London, came in the form of a $100 million collateralized bond obligation called Cheyne CBO I.

Morgan Stanley Dean Witter was the arranger, and the collateral was a pool of U.S. dollar-denominated convertible corporate bonds with an outstanding principal amount of $137.15 million. They are issued by 32 obligors in 14 countries, with 57% of the principal coming from Asia.

That geographic concentration makes the transaction more vulnerable to a regional downturn, but the level of subordinated notes was enough to warrant an A2 rating, said Moody's. Morgan Stanley officials declined to disclose pricing and investor information.

Korea: Still hoping

Mandates for Korean ABS, which materialized only a few months ago, continue to multiply in the domestic market. Two ground-breaking deals were priced recently: the first a non-performing loan securitization by the Korea Asset Management Corporation (Kamco), and an auto loan-backed securitization from Daewoo Financial Services.

Kamco's inaugural W320 billion ($256 million) deal, issued by a domestic SPC called Kamco Mirae-1 ABS Specialty Co. Ltd., was issued in six tranches of securities with maturities of two, three, five and seven years, plus two 10-year subordinate tranches. Coupons ranged from 5% to 20%, said a banker at Samsung Securities, which arranged the transaction with Hyundai Securities.

Last but not least, Daewoo Financial Service's W320 billion deal, arranged by Daewoo Securities with help from structuring agent Chase Securities, was also successfully sold in the domestic market.

Three tranches of bullet securities were issued: a W120 billion, one-year piece priced at 7.2%, a W90 billion, two-year piece priced at 8%, and a three-year, W19 billion piece priced at 8.3%. The entire issue was rated double A-minus by domestic rating agencies, seven notches higher than the originator's own rating of double B-plus.

"We emphasized bankruptcy remoteness to domestic investment trust managers, who accepted the concept and bought the deal," commented a Daewoo official in Seoul. "Having Chase as trustee and back-up servicer also interested many foreign players, so foreign participation in Daewoo Financial Service's next deal is likely." - VC

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