Malaysian palm oil plantation business Multi Vest Resources last week completed its debut M$160 million ($42.4 million) sale and leaseback deal. Deutsche Bank arranged the 10-year transaction, which sees Benta Plantations - a Multi Vest subsidiary - transfer ownership of plantation assets into the ABS Plantation Assets SPV. Benta will lease back the assets with a buyback option at the end of the deal.

Following the recent trend in Malaysia, Multi Vest has chosen to go down the Islamic securitization path, using the deferred payment principal of Al Bai Bithaman Ajil. The company will use proceeds from the deal to part finance the acquisition of plantation land in Indonesia.

"The transaction is Deutsche Bank's first Islamic securitization," remarked Raj Shourie, Deutsche's head of Asia ex-Japan securitization. "There is significant potential for replicating the structure with similar types of assets."

While the deal is Deutsche's first under the Al Bai Bithaman Ajil concept, it is not Malaysia's first ABS involving oil palm plantation assets. Rimbunan Hijau closed the debut of those assets in July with a M$143 million offering arranged by Overseas Chinese Banking Corp., and issued via the Midas Plantation SPV (ASR, 7/18/2005).

Multi Vest issued two tranches to investors and will hold a M$65.3 million unrated sub-piece. The M$50 million senior tranche, rated triple-A by Malaysian Rating Corp, priced at 6%, while the AA-rated M$45 million B-notes offer a 6.75% coupon. In comparison, pricing on the triple-A paper on the Midas Plantation deal ranged from 5.4% for 4.5-years to 5.8% for 8.5-years. 10-year Malaysian Government Securities are currently trading at 3.99%.

One Kuala Lumpur-based banker not involved on the deal said Multi Vest could be reasonably satisfied with the result. "Pricing might just be slightly at the higher end, but given the smaller size and nature of the asset class, the deal got a good to average outcome and in-line with market expectations for a one off transaction," the source said.

Also in Malaysia, Cagamas, the state-controlled secondary mortgage company and benchmark issuer, last week sent out request for proposals for its third MBS deal, sources said. The RFP makes no mention of whether it wants a conventional or Islamic offering or on deal size; although it is believed that the agency will look to raise at least M$2 billion from the sale.

Cagamas previously scored blowout successes on a M$1.6 billion conventional MBS in October 2004 (ASR, 10/18/04) and M$2.05 billion Islamic issue in July (ASR, 8/1/2005). The agency also mandated in June two separate consortia to work on deals backed by SME loans (ASR, 6/27/05), but sources say progress has so far been slow.

Moving across the border to Singapore, Prime Real Estate Investment Trust priced last Wednesday its debut 190 million ($236 million) CMBS. HSBC and Standard Chartered were joint lead managers on the deal, issued out of the Orion Prime SPV.

Pacific Star, a subsidiary of German insurer Ergo, established Prime REIT in August. The CMBS deal, along with proceeds from the REIT's IPO, will finance the acquisition of two retail and office complexes located in Singapore's shopping hub, Orchard Road. Rental income from the buildings will collateralize the CMBS deal.

Both Fitch Ratings and Moody's Investors Service assigned triple-A ratings to the single-tranche offering, which has final maturity of 6.5 years and an expected maturity of five years. After roadshows were held in major Asian and European cities, books opened with an indicative price range of 23-25 basis points over Euribor, a slight pickup over the trading level of CMBS deals by European issuers.

However, again emphasizing the demand for Singapore property securitizations from Europe, final pricing ended at a 22 basis point spread. "The issuer was able to price inside the marketed range due to the quality and location of the assets, plus the stability of the cash flows and management team," a source said.

The transaction was nearly three times oversubscribed, with main interest coming from banks and funds. It was evenly split between Asian and European accounts, the source added.

Orion Prime is the third Singaporean CMBS in 2005, following Suntec REIT's E327 million issue via JPMorgan in March (ASR, 4/4/2005) and Ascendas REIT's E165 million deal in May, arranged by BNP Paribas (ASR, 5/16/2005).

It will not likely be the last, however. The latest market gossip suggests CapitaLand is planning to issue its next CMBS before year-end. The property developer is easily Singapore's most frequent securitizer, issuing eight deals since 2002, the most recent of which was a $215 million deal in July 2004 via HSBC (ASR, 8/2/2004).

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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