After taking off in fits and starts over the last two years, Japan's domestic asset-backed market is finally showing signs of growing up.
Lack of paper in the domestic market, investors hungry for investment opportunities, and thinning spreads have all made it an ideal environment for domestic issuance in recent weeks. "From an originator's point of view, the current domestic market is very good. That is why so many are funding in the domestic market," said Yoichi Iga, manager of asset securitization at Daiwa SB Capital Markets.
Virtually all of the past two weeks' ABS deals came from repeat sellers whose issues were snapped up by investors, further proof that Japan's market is deepening. "The domestic market is showing signs of becoming more mature," commented Toru Kurihara, vice president in Fuji Securities' global capital market group.
The biggest deal came from Japan's biggest ABS issuer Orient Corporation (Orico), a leading provider of consumer finance. Its most recent autoloan-backed securitization is its seventh autoloan-backed deal to date, on top of four previous Euromarket issues. The 30 billion issue from Oracle Alpha SPC comprised six tranches of fixed-rate, five-year securities with coupons ranging from 0.250% to 0.970%, plus one floating rate tranche. As usual, DKB Securities arranged the transaction, which was rated triple-A by Standard & Poor's and Moody's.
Another repeat ABS issuer was Asahigin Leasing Company, a general equipment leasing company affiliated with Asahi Bank. Its 12 billion, equipment lease-backed deal was issued by AL Asset Management Company and comprised ten tranches of bonds with coupons ranging from 0.28% to 1.71% and maturities ranging from six months to five years. The deal was rated triple-A by Moody's and arranged by Daiwa SB Capital Markets, which arranged an earlier equipment lease-backed deal for Asahigin in March.
Finally, two forthcoming deals, which were not yet priced at presstime, are on their way. One from repeat issuer Sumisho Lease Company, which will launch a 35 billion, equipment lease-backed transaction arranged by Goldman Sachs, and a second from first-time issuer Fine Credit Company, which is readying a 15 billion, shopping loan-backed deal arranged by Fuji Securities.