After a lull over the past month, Japan's asset-backed market is starting to gain momentum.

Leading the pack was a $416 million deal backed by equipment leases from Diamond Lease Co., the biggest-ever global ABS originated in Japan. Maestro Securitisation Corp. issued the notes, which have an average life of 1.82 years and were priced at 41 basis points over one-month Libor. They were issued at a slight discount of 99.96. The entire issue was rated triple-A by Standard & Poor's and Moody's and was placed mainly in Europe, followed by Japan.

"The pricing was fair and on the market not too generous nor overly aggressive. We issued at a slight discount for investors who liked a bit up-front for the short average lives," commented an official at lead manager Tokyo Mitsubishi International in London.

Previously, Diamond Lease had also privately issued 30 billion ($246 million) in asset-backed commercial paper, which was placed in a conduit sponsored by Credit Suisse First Boston. The 2.5-year average life, 5-year maturity, lease-backed securities were rated triple-A by Moody's and Standard & Poor's, said sources.

Domestic Market Gains Momentum

ABS activity was greater in Japan's domestic market, which saw both repeat and first-time issuers preparing to come to market.

One newcomer is JACCS, a leading non-bank finance company, which will launch a 11.9 billion deal backed by auto loans and arranged by Tokyo-Mitsubishi Securities. An SPC called JACCS Asset Funding Corp. will issue six classes of notes with a maturity date of January 2003. The entire issue has received a preliminary triple-A rating from Standard & Poor's.

Earlier in the month, auto finance provider Aplus Co. issued its third domestic auto loan securitization, arranged by Sanwa Securities. The 13 billion deal, issued by Aplus Asset Back Corporation The Third Series, comprised nine tranches with coupons ranging from 0.275% to 1.275% and a final maturity of April 2004. Moody's and Japan R&I rated the deal triple-A.

Past ABS issuers Japan General Finance (JGF) and Showa Leasing will also launch in the domestic market next month. JGF will launch a 20 billion, kimono-loan backed transaction arranged by Daiwa SB Capital Markets via an SPC called Spring Funding. Collateral is a 24 billion pool of loans extended to women for the purchase of kimono, which can cost several thousand dollars.

Finally, in a more mundane transaction, IBJ Securities is arranging a 40 billion, office equipment-backed deal through Sunflower Funding Corporation for Showa Leasing Co. Both transactions have already received preliminary triple-A ratings from Moody's.

- VC

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