Japan's biggest mortgage originator, the Government Housing Loan Corp. (GHLC), recently confirmed plans to issue its first mortgage-backed securities. It will issue 50 billion ($471.5 million) of mortgage-backed securities in the next fiscal year beginning in April, said a GHLC official in Tokyo.

The confirmation was welcomed by securitization pros in Japan, who will hope that the quasi-governmental agency's efforts will help kick-start Japan's dormant mortgage-backed market.

The GHLC has hired Mitsubishi Trust & Banking Corp. as a structuring adviser, and after April will begin inviting proposals from potential underwriters, said the official. The agency has already been approached by many domestic and international houses interested in arranging the first issue, but no decision will be made until the new fiscal year begins, he said.

The debut issue will be domestically placed and rated, though the GHLC is not currently rated and has no intention of obtaining one, said the official.

However, given its quasi-sovereign status and the strength of its name, it should have no problem selling MBS to domestic investors, predicted one securitization head in Tokyo.

"Doing a yen issue in the yen market makes the most sense, as the GHLC is so well-known and probably would get much better pricing in Japan than overseas," he said.

Many structured finance bankers in Tokyo are keenly interested in the GHLC's upcoming securitization, though some have expressed frustration with the body's slow pace.

As the dominant source of mortgage finance with assets exceeding 70 trillion, GHLC participation is key to unlocking Japan's secondary mortgage market. And once it becomes an active issuer, it will provide an important benchmark and prod more banks to issue MBS on their own, agreed sources.

Given the volume of potential issues from the GHLC, many leading investment banks in Tokyo are now gearing up to make their pitches. "Anyone who wants a piece of the Japanese MBS market is going to interested in this. It's a pretty big opportunity," commented another banker.

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