Standard Chartered First Bank (SCFB), the Korean subsidiary of Standard Chartered, is prepping what will be ex-Japan Asia's largest ever cash securitization. According to reliable sources, SCFB is still finalizing the pool size for its sixth cross-border RMBS, but hopes to raise over $1 billion when it goes to market in mid-October.
That would exceed the Hong Kong Government's HK$6 billion ($769 million) securitization of tunnel and toll receivables completed in May 2004 (ASR, 5/10/04).
Unsurprisingly, Standard Chartered has been selected as arranger for SCFB's latest outing. A source said the deal would be the first public offering by SCFB not to feature a monoline wrap, which had been structured in to previous issues to ensure triple-A ratings and tight pricing.
However, with SCFB firmly established as the region's benchmark RMBS issuer and rating agencies now willing to assign triple-A ratings to unwrapped Korean ABS deals, the borrower feels confident it can achieve competitive spreads without a guaranty.
The bank last tapped the market in April with a $650 million MBIA-wrapped issue. The deal paid 15 basis points over Libor, two points outside SCFB's benchmark (ASR, 4/10/06).
It is shaping up to be a busy period for Standard Chartered. The bank is also arranging a $300 million credit card ABS for Samsung Card, Korea's biggest card originator. Samsung, a regular issuer since 2001, wants to complete the deal by the end of October.
Turmoil in Thailand
In another development, bankers are trying to determine what impact last week's military coup in Thailand will have on the ABS market. The South East Asian country was expected to provide a steady stream of deals over the next few months.
Just prior to the ousting of Prime Minister Thaksin Shinawatra last Tuesday, state agency Dhanarak launched the second transaction from its THB24 billion ($635.9 million) ABS program. Proceeds will fund construction of government offices on the outskirts of Bangkok.
Dhanarak was due to sell two tranches totaling THB8.2 billion. Fitch Ratings assigned triple-A ratings to the 14 and 19-year bonds, with tranche size to be determined.
Bangkok Bank, Government Savings Bank, Thai Military Bank and HSBC are joint underwriters, reprising their role on Dhanarak's THB10.3 billion debut in November 2005 (ASR, 12/5/05).
Roadshows were held early last week with pricing scheduled for early October. However, observers expect the transaction's closing to be delayed by at least a couple of months.
The immediate future of a proposed THB6 billion joint future flow transaction by the Petroleum Authority of Thailand (PTT) and the Ministry of Energy is also uncertain. Request for proposals were sent out earlier this month for the deal, which will finance construction of new offices to house the two agencies.
SPV Energy Complex Co. was recently established to manage the project, with completion scheduled in the third quarter of 2007.
"With the political instability, its impossible to predict whether this will see the light of day now," said a frustrated banker who submitted a proposal a day before the coup.
Elsewhere, price guidance has emerged for China's first cross-border commercial mortgage-backed securitization, called Dynasty Assets (ASR, 9/18/06). Citigroup is sole lead manager on the $145 million issue, which it jointly arranged with Macquarie Bank.
The transaction will be collateralized by income earned across nine retail properties in Eastern China that are owned by Macquarie Wanda Real Estate Fund.
A source close to the deal said the 2.75-year notes - rated A2'/'A' by Moody's Investors Service and Standard & Poor's, respectively - are being marketed at 65 basis points over Libor. Final pricing is due this week.
Before guidance emerged, rival bankers estimated a spread of between 50 and 75 basis points. To some, the indicative pricing reflects the additional risk of a new asset class.
"If the pricing does end at 65 basis points, that is a premium of 10 to 15 points over where any property-backed deal would price if it came from Singapore or Hong Kong with the same rating," one banker said.
Another market veteran offered a different view. "It looks on the low side to me given that risks associated with onshore China assets collateralizing a cross-border offering are still not widely understood," he said. "However, I guess investors will take a position on the basis of Macquarie and Citigroup's involvement."
Hong Kong's MBS
Hong Kong Mortgage Corp. (HKMC), the state secondary mortgage agency, has sent out request for proposals for the latest issue from its Bauhinia MBS program. HSBC and Standard Chartered, two Hong Kong-listed banks, are frontrunners to arrange the transaction, which will be between HK$1 billion ($128.4 million) and HK$2 billion.
HSBC arranged HKMC's most recent outing, a HK$2 billion issue in October 2004 (ASR, 10/25/04), acting as sole bookrunner for the institutional tranches and joint lead with Standard Chartered for the retail bonds.
Taiwan's Hsinchu International Bank last week completed its second cross-border RMBS. Calyon Securities acted as sole lead manager on the 255 million ($323.3 million) deal, sold via the Hsinchu International Mortgage SPV.
The deal, backed by a pool of 5,217 mortgages, featured a guaranty by Ambac Assurance to secure triple-A ratings from Moody's and S&P.
According to a source, the notes priced at 15 basis points over Libor on a 2.39-year weighted average life. That is two points inside the mark achieved on Hsinchu's debut last December (ASR, 1/9/06), although the average life on that deal was 3.5-years. The source added that the transaction was oversubscribed, with the bonds placing with Asian and European accounts.
(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.