Merrill Lynch spinoff Merrill Lynch Global Emerging Partners recently announced that it has bought a 9.5% interest in Korea's secondary mortgage company, the Korea Mortgage Corporation (Komoco). Merrill's investment cost Krw10 billion ($8.8 million), half of which went to buying 4.75% of the International Finance Corp.'s - the World Bank affiliate - 15% share. The remaining stake came from the issue of new shares.
Merrill joins the Korean Ministry of Construction & Transportation, the Housing & Commercial Bank, Kookmin Bank, Korea Exchange Bank, Samsung Life Insurance, as well as the IFC, as a shareholder in the government-sponsored entity.
As part of the deal, Merrill will aid Komoco through providing technical assistance in business development, information technology and mortgage-backed deals. Merrill has outsourced part of this work to two U.S. businesses: mortgage lender Countrywide and secondary mortgage company Fannie Mae.
Komoco was set up in order to purchase portfolios of residential mortgages with the purpose of securitizing them. It completed its first deal in April (ASRI 4/24/2000 p.1) with a W395 billion transaction, backed by mortgages that were originated by the state-owned National Housing Fund.
The nine senior tranches received triple-A ratings from two local agencies, and paid interest coupons of between 8.2% and 10%.