The ABS deal pipeline is heating up in Japan as securitizations from the country's consumer finance companies and the Japanese government come to market.

Two transactions are in the works from Central Finance and Mitsui Sumitomo Insurance. Central Finance, one of the country's biggest consumer finance providers, launched a 10 billion deal ($85.7 million) backed by a pool of credit cards.

Mitsubishi UFJ Securities is lead manager on the seven-year deal, comprising 9 billion of senior beneficial interests - rated triple-A by Moody's Investor's Service - and an Aa2-rated 1 billion mezzanine tranche.

Meanwhile, Mitsui Sumitomo Insurance Co. will securitize 15.1 billion of loans to owners of condominiums bought specifically for the rental market. In a deal arranged by Deutsche Bank Securities, the company will sell its loan claims to a newly created special purpose trust, which will sell three series of preferred beneficiary rights to institutional investors.

In addition, Mitsui will sell a subordinated tranche to consumer finance company Jaccs Co. The latter is the guarantor of the borrower's loan claims so is well aware of potential default risk.

Japanese government ABS

Also in Japan, the Ministry of Economy, Trade and Industry (METI) last week announced plans to establish a securitization program designed to help smaller Japanese companies with operations in non-Japan Asian countries.

With bank loans not easily available for SMEs, either domestically or overseas, METI believes the ABS facility will help them raise funds to support expansion plans. Ministry officials didn't give details on the program's timing or size.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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