News emerged from Taipei last week that Citigroup Global Markets secured its third Taiwanese securitization mandate. The bank will arrange an NT$4 billion (US$137 million) credit card-backed deal for Bank Sinopac's AnShin Card business, which will be the first time Taiwanese credit card assets have been securitized.
In April, Citigroup structured an NT$4.4 billion residential mortgage-backed deal for Taishin International Bank, and is also acting as lead manager on another MBS deal for Chang Hwa Bank, a deal believed to have a targeted launch date in October.
Citigroup's success in Taiwan, which, along with Singapore is providing the bulk of supply in non-Japan Asia, suggests that it is one house capable of challenging HSBC for supremacy in the region.
Perhaps it's no surprise that both banks are enjoying success in 2004. While fees have dropped significantly, causing some firms to cut back Asian ABS efforts, Citigroup and HSBC have continued hiring.
Meanwhile, another bank looking to continue building its securitization franchise is Bank of Tokyo Mitsubishi. As part of a wider initiative to develop bank revenues in South and Southeast Asia, BOTM will hire new staff for its non-Japan Asian ABS group, based out of Singapore.
BOTM scaled back its presence following the 1997 Asian financial crisis that crippled the region. But with Japanese firms again starting to identify new markets outside the home base, BOTM also senses an opportunity.
The bank has been a small player in the non-Japan Asian ABS market, arranging deals for the Hong Kong credit card subsidiary of Japan's AEON consumer finance firm.
One interesting deal imminent for launch in Japan will be the country's first synthetic collateralized bond obligation, backed by unsecured loans to small and medium-sized enterprises.
The Y22.6 billion (US$206 million) deal will be bought in its entirety by the Japan Finance Corp. for small and medium-sized enterprise (JASME) as part of a new program, which the government agency hopes will raise Y150 billion (US$1.3 billion) in 2004. Mizuho Securities and Merrill Lynch have been appointed joint managers for the private placement transaction, which has an expected average life of 3.2 years.
Staying in Japan, Central Finance, the Nagoya-based consumer credit company with assets of Y1100 billion (US$10 billion), last week launched a Y22 billion (US$200 million) transaction backed by installment sales receivables. UFJ Tsubasa Securities is lead manager on the deal, launched via the CF Shopping Credit Trust vehicle, expected to close Sept. 6.
The transaction has been split into seven fixed-rate tranches, six of which are rated triple-A by Moody's Investors Service, with maturities going up to seven years.
Further evidence of the growing appeal of real estate investment trusts (REITs) in the region has come through the results of a survey by Japan's Association for Real Estate Securitization.
Eighty-eight percent of the country's regional banks and insurance companies had investments in REITS by 2003 fiscal year-end, according to the Association - a 33% increase from the year before.
Investments in private placement REITS jumped 30% to 44%, with institutional investors citing value as a hedging tool against long-term interest rates and as a diversification play.
Conversely, only 6% of employee pension funds have so far invested in REITs. However, that's unlikely to remain the case, with 31% considering whether to buy REIT products. REITs have also been established in Singapore and Taiwan, while Hong Kong's Housing Association is also expected to launch its own in the next year.
Across the region, investors have warmed to REITS as a high-yielding investment tool, and a less risky alternative to whole ownership of commercial property.
Staying on the theme, Millea Real Estate Risk Management says it will launch a Y10 billion (US$91 million) real estate fund in November or December. The firm will invest in midsize regional properties - of between Y1 billion to Y5 billion, and then target institutional investors to purchase ABS products backed by incomes generated by those properties.
Millea originally planned to purchase large-scale commercial properties in metropolitan areas for the fund. However, the recent recovery in the property sector has led to a scarcity of suitable property, so Millea was forced to reassess the situation.
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