The Korea Land Corp. (Koland), a government land bank, has recently launched the first of three structured deals backed by the proceeds of real estate. Though touted as Koland's first securitization, the transaction is more noteworthy for showing how Korean bankers have been creatively applying securitization principles to obtain funding in the domestic market.
The W405 billion ($336 million) transaction was arranged by Daewoo Securities, Samsung Securities, Korea Development Bank and Korea Housing and Commercial Bank. Koland transferred industrial real estate purchased from companies to a domestically incorporated SPC called Landpia II 1999-1, which then issued two tranches of securities: a three-year tranche with a principal amount of W205 billion was priced at 9.4%, while a five-year tranche with a principal amount of W200 billion was priced at 10.15%. The transaction was rated triple-A by two domestic agencies, KMCC and Korea Investors Service, and placed with domestic banks and insurance companies.