The Korea Asset Management Corp. (Kamco) rang in the new year with the issue of a W340 billion ($302.2 million), non-performing loan-backed quasi-securitization on January 19. It is the first of nine NPL-backed securitizations totaling nearly W5 trillion that the bad debt-clearing agency plans for this year.
The issue was backed by a pool of restructured corporate loans with a face value of W365.6 billion which Kamco purchased from nine domestic banks. It comprised five tranches of bonds with maturities of one, two, three, five and seven years and yields ranging from 10.22% for the one-year tranche to 12.32% for the seven-year tranche.
Housing & Commercial Bank provided a line of credit of W130 billion over seven years, effectively guaranteeing payment on the bonds. Kamco can also exercise put-back options on the assets to the selling banks, a typical feature in Kamco's ABS, which is designed to put pressure on those banks to make sure that obligors make payments on time.
Domestic ratings agencies KIS and NICE rated the one and two-year tranches triple-A, and the three, five and seven year tranches double-A. The entire issue was placed with domestic insurance companies, banks and pension funds, said a banker at Samsung Securities Co., which co-arranged the issue with Shinhan Securities Co