With long-demanded changes to Japan's Trust Law (see ASR 5/10/04) likely to be passed by legislators before year-end, banks are ready to take advantage of the changes.
For cost purposes, most deals in Japan are issued through trusts rather than SPVs. The current law allows a limited amount of assets - principally money, securities and property - to be sold into trusts. However, the revised law will allow copyrights, trademarks, patents and other intellectual property to be included.
Among the potential beneficiaries will be Japanese movie and animation companies. Securitization will give them funds to work on new products through selling existing title rights to securitization trusts.
Accordingly, Sumitomo Trust and Banking Co. has lined up a deal with the film company Artist House for its movie, video and DVD sales rights. If Diet - Japan's legislative body - passes the bill in December, the Sumitomo-Artist House deal could be ready by the end of January.
The transaction could be worth between 10 billion to 20 billion ($96.8 million to $193.6 million), but is only the tip of the iceberg. The movie and animation sector is estimated to be worth 11 trillion ($10.6 billion). With many companies struggling to raise money through traditional means, trust securitization could be the answer.
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