The Government of Japan last week submitted a reform bill to the Diet - the country's legislative body - requesting approval to securitize state-owned real estate assets located in Tokyo.
The move is part of an initiative to halve the ratio of government assets - worth around 430 trillion ($362.7 billion) - to gross domestic product by 2015, and to use funds to redeem existing government bonds.
If the bill is approved, the government will in the next month decide which properties to include in the sale. According to sources, government offices located in the capital's Kasumigaseki district, estimated to be worth 9.7 trillion, are prime candidates to be sold along with residential buildings housing civil servants.
The government completed a similar securitization exercise in 2000 when it sold 14 properties in Tokyo.
Other Japanese activity
Also in Japan, RMBS deals from Chuo Mitsui Bank and SBI Mortgage Corp. were being readied as of press time. Chuo Mitsui launched a 114 billion deal - its ninth RMBS - with Nikko Citigroup and Daiwa Securities as joint lead managers.
The deal is backed by 6844 loans with an outstanding principal of 129.4 billion, a weighted average loan to value of 77.3% and seasoning of 20 months.
Moody's Investor's Service assigned triple-A ratings to 68 billion of floating rate notes and 46 billion of fixed-rate securities, both of which reach legal maturity in 2042.
SBI, meanwhile, appointed Deutsche Bank Securities for its 10.55 billion offering, consisting of 10 billion of triple-A paper, as rated by Moody's, and a 0.55 billion subordinated piece rated Baa2. Legal maturity is reached in 2042.
Tight pricing is anticipated for both transactions. Sumitomo Mitsui Banking Corp. was the last private borrower to tap the markets, securing last month pricing of 0.94% for its 2.9-year average life piece and 1.91% for the 12.2-year notes. Moody's and Standard & Poor's rated both fixed-rate tranches triple-A.
Meanwhile, the Japan Finance Corporation for Small and Medium Enterprise (JASME) will soon launch its latest CLO. The 6.17 billion deal is backed by a 7.1 billion pool of corporate loans originated by 13 financial institutions to SMEs.
Mitsubishi UFJ Securities is the arranger on the three-year offering, which features 6 billion of triple-A notes and an 170 million A1'-rated sub-piece.
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