The Korea Asset Management Corporation will launch its first asset securitization in early June, according to a syndicate member at Daewoo Securities, which along with Hyundai Securities is arranging the transaction.

The domestic W320 billion ($270 million) issue comprises six tranches of securities, with maturities of two, three, five, and seven years, plus two subordinate tranches. Except for the five-year tranche, all the securities will be floating-rate, he added. Domestic ratings agencies KMCC and Korea Investors Service rated the senior two-year piece triple-A and the rest double-A.

The deal is backed by non-performing loans purchased by KAMCO from Shinhan Bank, Hana Bank, Housing and Commercial Bank, and KorAm Bank. Those four banks, in addition to KAMCO, will service the loans. And though Korean ABS law does not require a trustee, Koomim Bank will serve in that role, the syndicate member added. Asset-backeds are relatively new in Korea, but since the yields are higher than straight bonds, domestic investors will likely show high demand for them, he added.

Pricing for the transaction is set for July 10.

Auction Better Than Expected

KAMCO's fund-raising efforts have been gaining momentum, reflecting the Korean economy's brighter outlook. Launch of its first ABS this month follows the better-than expected results of its latest NPL auction in late May. In its biggest sale to date, KAMCO sold three pools of distressed assets for W772 billion ($652 million) to two consortiums.

One group, comprising Goldman Sachs, Hyundai Investment Trust, and Hyundai Securities, bought two pools; a second group, comprising Morgan Stanley Emerging Markets Fund, Tongyang Investment Bank and Cerberus Capital Management, bought the third pool and will negotiate privately to buy a fourth pool that went unsold. Altogether four pools totaling W915 billion were put up for sale, allowing KAMCO to recoup 16% of the outstanding principal loan balance. - VC

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.