The government of Thailand has mandated a consortium led by HSBC for its proposed HB24 billion ($626 million) securitization program (see ASR 3/14/05), an official at the bank confirmed last week.

HSBC will work with the Government Housing Bank, Thai Military Bank and Bangkok Bank on the plan, which will fund the construction of an office development to house 28 government departments. The ABS paper will be backed by future rentals collected from those departments.

The winning consortium beat bids from two other groups: Standard Chartered, Kasikornbank, Krung Thai Bank and Siam Commercial Bank in one corner with Deutsche Bank Securities and Bank Thai in the other.

According to a source familiar with the mandate, once HSBC aligned itself with Government Housing Bank, the outcome was somewhat inevitable. "[Government Housing Bank] is a major investor and the only one that will agree to buy a sizeable portion so far in advance at a fixed credit spread," the source commented.

That argument seems plausible, especially when looking for explanations as to why the Ministry of Finance took the step of announcing specific details about its ABS plans at such an early stage in the proceedings. The Ministry of Finance wants to do three transactions with maturities between 13 and 20 years, and stipulated in the RFP how big the tranches will be on each deal and their maturities. Perhaps, as the source suggests, the agency was simply taking into account what its principal investor wants.

The agency wants to complete the first deal sometime in the fourth quarter, with the THB9.5 billion offering comprising THB4 billion of 13-year paper, THB2 billion of 19-year notes and a THB3.5 billion 20-year tranche.

Assuming all goes to plan, a second deal - totalling THB9 billion - will go ahead in 2006; featuring a THB2.5 billion, 18-year piece and THB6.5 billion of 19-year notes. The third transaction - comprising THB5.5 billion of 18-year paper - is scheduled for 2007.

Some bankers suggest HSBC helped secure its involvement by agreeing to hard underwrite the first offering, not an unusual practice on Asian securitization offerings, but rivals also grumbled the deal "could be a huge time suck for very little [in] fees."

HSBC, however, can point to how it was able to execute the Hong Kong Government's HK$6 billion ($769 million) tunnels receivables deal - from mandate to completion - in just nine weeks last year (see ASR 5/10/04). Regardless of the fees involved, the transaction definitely raised HSBC's securitization franchise profile. This, no doubt, helped in its negotiations with the Thai Government and with Cagamas, Malaysia's state-owned secondary mortgage company, which last month selected HSBC to arrange its first Islamic MBS offering (see ASR 3/21/05).

Staying in Thailand, the consumer finance company Siam Industrial Credit Co. last week held roadshows in Bangkok for a THB4 billion auto-loan ABS. Standard Chartered is arranging the deal with support from Siam Commercial Bank, which holds a 39% interest in Siam Industrial. Settlement is slated for May 12.

Although the record will not last long due to the Government's proposed ABS, the issue will be the country's biggest domestic securitization to date.

The one-tranche transaction, to be issued out of the SICCO SPV, features THB4 billion of amortizing debentures, which have a 6.5 year legal final and a 2.85 year expected average life. Fitch Ratings has assigned local ratings of triple-A to the paper. Credit enhancement comes chiefly through overcollateralization, with the underlying asset pool worth THB4.9 billion.

Copyright 2005 Thomson Media Inc. All Rights Reserved.

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