The Korea Asset Management Corp. (Kamco) has selected Warburg Dillon Read and Deutsche Bank A.G. as advisors to help structure a global non-performing loan-backed securitization to be launched early next year, said a Kamco official.
The selection comes after the agency invited banks to submit requests for proposals in October (ASRI 11/1/99 p.2). If successful, it will be Kamco's first international NPL-backed securitization. The agency, which was mandated in 1997 to clean up South Korea's banking sector, is looking to overseas investors to diversify its sources of funding. This year, it has already issued three NPL-backed deals placed in the domestic market.
Meanwhile, the agency forged ahead in its asset disposal efforts by holding its sixth international auction of distressed loans last week. Nine tranches of non-performing real estate loans with a face value of W1.02 trillion ($897 million) were sold.
Morgan Stanley Dean Witter & Co. was the largest buyer, walking away with five tranches totaling W579.8 million. Goldman, Sachs & Co. came in second, buying two tranches totaling W257.4 million. Deutsche Bank A.G. and Samsung Life Insurance Co. together bought one tranche worth W100.6 million, while Lone Star Global bought one tranche worth W84.8 million.
Average recovery price was almost 43 cents on the dollar, which was significantly higher than the 20 cents on the dollar Kamco achieved in its last auction in November. However, assets in the November sale were non-performing restructured corporate loans, most of which were unsecured, making it difficult to compare results between the two sales, the Kamco official explained. "We are very satisfied with the results, as the price was much higher than we expected," he added.
Assets sold last week were collateralized by commercial and residential properties, buildings, factories, and raw land. Since a high ratio of loans was backed by factories and raw land, the average price was a bit less than that fetched in previous real estate loan auctions, he said. In the previous real estate loan sale, average price was 51% of face value. The auction is Kamco's fourth and last one this year.