One of Korea's most active issuers and largest credit card companies, Samsung Card, has recorded the tightest spreads yet for an unwrapped cross-border ABS deal from the country. The $300 million private placement was arranged by Standard Chartered and issued out of the Frontier SPV.
The notes, rated triple-A by Fitch Ratings and Moody's Investors Service, priced at a razor thin 12 basis points over Libor for an expected average life of 2.5-years.
Credit enhancement comes chiefly through subordinated seller interest, equal to 24% of the underlying pool, to be retained by Samsung plus a reserve fund and accrued excess spread.
While the level of credit support is relatively high, one banker said he expects to see fewer conduit and private placement deals going forward if spreads remain so tight.
"I think we are reaching terminal velocity on pricing," he said. "There is a dearth of good clients coming to market, which explains why borrowers are able to achieve such low pricing. However, this is also why the principal finance sector is getting hotter: more and more bank investors are going to go right to the raw assets in future.
SCB CLO price guidance
Price guidance has emerged on the third synthetic CLO by Standard Chartered Bank (SCB), the Hong Kong and London-listed emerging markets specialist.
The deal - issued via the Start SPV - is being jointly handled by SCB and Lehman Brothers and transfers the risk on a $1.5 billion pool of corporate loans. Around 81% of the obligors are Asian credits.
The deal features five rated tranches, an unrated subpiece and a first loss tranche to be retained by SCB. All the notes have an expected maturity of 3.5-years.
Indicative pricing for the $56.25 million A class notes, rated triple-A by Fitch, Moody's and Standard & Poor's, is in the low-mid-30 basis points over Libor range. This is roughly in line with the 33 point spread the senior notes on SCB's second CLO, completed in June 2006, carried.
The $41.25 million B-class piece -rated AAA'/Aa1'/AA' - has been marketed in the low 40s range, while the $22.5 million of A+'/A1'/A-' rated C-bonds are expected to price in the mid-to-high 70s range. In addition, the $37.5 million triple-B notes and $30 million double-B rated paper will respectively offer spreads of around 180 and 400 basis points.
According to sources, the $93.75 million unrated sub piece has already been sold at Libor plus 700 points.
Elsewhere, according to local media, Goldman Sachs Japan has decided not to act as one of the lead managers on the upcoming 1.45 trillion ($12.3 billion) whole business securitization by telecoms giant Softbank.
The bank, along with 15 other institutions, was due to underwrite approximately 100 billion of the bonds, which will be backed by the assets and revenues generated by Softbank's mobile subsidiary (ASR, 10/02/06).
No explanation has been given for Goldman's late withdrawal. It is expected one or more of the existing lead managers will underwrite Goldman's allocation rather than a new entrant to the syndicate.
Softbank's deal - structured by Citigroup, Deutsche Securities and Mizuho Corporate Bank - will be the largest securitization ever in Japan and is due to close next month.
The transaction will enable the company to refinance at lower interest rates the 1.3 billion of bridge loans used in its acquisition in April of Vodafone KK, the Japanese subsidiary of the U.K.'s Vodafone Group.
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