From a Korean ABS market - described by Fitch Ratings in a recent report as stressed but surviving' -Shinan's Card's first cross-border securitization deal emerged last week.

The transaction securitized credit card receivables and the bonds were then placed in BNP Paribas's ABCP conduit Thesee Ltd. The E300 million (US$353.76 million) deal obtained AA-' ratings from all three rating agencies.

While issuance is expected to be lower than last year, Fitch said in a recent report that Korean consumer finance ABS will still be more than likely the dominant asset class for the non-Japan Asian ABS market.

However, there has not been any public issuance to date, so deal flow will likely pour into the private market.

It's not unusual for Korean card companies to avail themselves of conduits, especially in more difficult times, says Ben McCarthy, a Fitch Ratings analyst. "I think we will continue to see card companies going through conduits, rather than accessing the public market this year," he said. "We have already seen a couple of other transactions at the beginning of the year use conduits. Issuers like to use conduits because they have a guaranteed execution. We would expect probably two to three deals more before the year-end."

Mortgages are also in the pipeline, with one deal expected to close in 2003. Fitch anticipates this asset class will develop further in the latter half of 2004.

Although Fitch estimated at the beginning of 2002 that issuance in Asia this year would total over US$4.5 billion, by early September the actual figure was approximately US$1 billion. The rating agency has now revised the volumes, and is predicting closer to US$3 billion by the year end. McCarthy says that aside from some deal flow in Singapore this year, where deal size remains small, and some sporadic deals in Thailand and Taiwan, there has been very little issuance outside of Korea.

Things have certainly changed in 2003 compared to 2002 levels of ABS issuance from the region.

The Fitch report Stressed but Surviving predicts that 2002 will eventually be considered a benchmark year for the region; the year saw 14 Asia-Pacific ABS transactions rated on the international ratings scale, of which 11 originated in Korea. Deals rated on a domestic scale were recorded in Korea, Thailand and India.

Fitch also indicated that only six ABS transactions have been

completed year-to-date in the Asia-Pacific arena, of which only four had been rated.

Taiwan completes first multi-tranche securitization

In Taiwan, Standard & Poor's and its affiliate, Taiwan Ratings Corp., rated a Taiwan dollar CLO transaction, originated by the Credit Lyonnais branch located in Taipei. This represented the second transaction to emerge from Taiwan this year.

According to a S&P press release, the four tranches of certificates, totalling NT$7.2 billion (US$21 million) are backed by a portfolio of 17 Taiwan dollar-denominated corporate bank loans originated by Credit Lyonnais, specifically for the transaction. The deal also included mezzanine tranches, which according to the rating agency, made this Taiwan's first multi-tranche securitization.

Jerry Fang, at Taiwan Ratings, says that in the short-term CLOs and RMBS will be seen as popular asset classes to securitize. According to local newspapers an RMBS transaction is in the works, and is expected to come to market before year end.

Business in Thailand sees a boost

Thailand has been busy in recent weeks with a securitization of Thai auto hire purchase receivables originated by the Scandinavian Leasing Public Company. This is a subsidiary of Swedish Motors Corp. The arrangers of the transaction are two local banks, Devonshire Kiatnakin and Trinity Advisory. The deal issued THB 1.0 billion (US$25 million) worth of bonds.

Thailand launched two domestic structured deals last year: GT Stars II from Lehman Brothers and a deal from the National Housing Authority of Taiwan, Osprey

series II.

"There is a lot of interest growing for structured finance deals, and we would expect two to three deals to come to market next year, although it is difficult to put an issuance size in terms of volumes to the market," said Pimolpa Simaroj, analyst at Fitch Ratings. "We expect most of the deals to emerge to be in the consumer finance sector." Simaroj also records the growing interest from the international banks to be involved in the emerging Thai securitization market.

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