In another sign of Japan's developing asset-backed market, Standard & Poor's will rate the quality of servicers in Japan, the first time that the agency has offered such a service outside the U.S.

The new service comes in response to strong market demand in Japan, where servicing is a growing business and investors are becoming more savvy about analyzing asset-backed deals.

"A lot of Japanese servicers knew about our U.S. rankings, and saw this service as a way to promote themselves to investors. And investors always like to have more information about servicers. It was something that the market clearly wanted," explained Yu-Tsung Chang, director of structured finance ratings in Tokyo.

As in the U.S., commercial loan servicers, asset managers, and back-up ABS servicers will be rated on a five-point scale ranging from strong to weak. Third-party servicing in Japan is a relatively new but increasingly important concept, thanks to the collapse of Japan Leasing Corp. last year.

The need for an objective assessment of servicers will grow as the number of servicers approved under Japan's Servicing Law increases. And though S&P will not require the servicer evaluation in Japan ABS, a strong back-up servicer could lower the credit and liquidity enhancement of the transaction, added Chang.

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