While the festive season normally sees a lull in activity, but some deal makers were eager to complete transactions before the holidays. The most noteworthy was the completion of Hong Kong's Pan-Asian Mortgage Company's HK$257 million ($33 million) securitization of negative equity residential mortgages, a global first ( see ASR 11/22/04).

Issued out of the SMART SPV and arranged by South Africa's Standard Bank, the deal was backed by a HK$1.25 billion pool of mortgages with LTV's over 100%, a situation caused by falling property prices in the territory in recent years.

The rated part of the deal comprises HK$221 million of A-class notes, rated Aa2 and double-A minus by Moody's Investor's Service and Standard & Poor's, respectively, and HK$36 million of junior paper, rated triple-B by S&P.

The senior paper, with expected average lives of between 1.5 and 2.2 years, priced at Hong Kong Prime minus 275 basis points, or 2.375% - towards the tight end of the indicative range. The junior notes closed at Prime minus 50 basis points, or 4.675% - slightly wider than anticipated.

A source at Standard Bank said the deal was comfortably oversubscribed, hardly surprising given the pick-up was far more attractive than other similarly rated investments.

Meanwhile, two deals were completed in Taiwan late December. First up was the NT$5.35 billion ($167.6 million) debut CLO by International Commercial Bank of China. Calyon Securities and the issuer were joint arrangers - issued via the ICBC 1ST CLO trust - while local firm Grand Cathay Securities acted as underwriter.

A static pool of 17 corporate loans backed the transaction, which has an expected maturity of three years and legal final of five years. The loans were originated specifically for the deal, with the principal and interest repayment schedules mirroring those of the rated trust certificates.

The deal featured three tranches. The NT$3.424 billion senior certificates, assigned local ratings of Aaa.tw' by Moody's, priced at 40 basis points over the three-month commercial paper index. That matched the pick-up on Taiwan's most recent CLO; a NT$4.9 billion offering by Bank Sinopac in August, also arranged by Calyon.

In addition, ICBC issued a NT$876 million mezzanine tranche, offered at 100 basis points over the CP-index. Principal credit enhancement came from the NT$1.07 billion subordinated piece, retained by the issuer, as well as a liquidity reserve and excess spread. According to Calyon, the deal was 1.5 times oversubscribed.

Another Taiwanese entity, Hung Tai Construction, became the last issuer of 2004, when it closed its NT$2.1 billion CMBS on Dec. 28. Deutsche Bank arranged the deal, backed by revenues generated on the Hung Tai Century Tower, Taipei (see ASR 11/15/04).

The transaction, the biggest so far under Taiwan's Real Estate Securitization Law, matures in 2012, and featured two fixed-rate tranches. The NT$1.765 billion senior certificates, rated triple-A by Fitch Ratings, offers a 2.80% coupon and has weighted average lives of 4.88 years. The NT$355 million junior certificates, rated single-A, pay 3.00% and have six-year average lives.

The transaction was oversubscribed and placed with over 10 accounts, according to a banker involved. Interest came from insurance companies, banks, bill finance companies and bond funds.

Staying in Taiwan, one of the country's biggest credit card originators, AnShin Card Services, was set to launch its debut ABS as ASR went to press last week. AnShin, which has a portfolio worth NT$19.1 billion and lists Bank Sinopac as its main shareholder, selected Citigroup Global Markets in August to arrange the NT$3.76 billion deal (see ASR 8/23/04).

The transaction will be launched out of the AnShin Credit Card Special Purpose Master Trust the first master trust established in Taiwan. This allows AnShin to launch repeat deals through the vehicle and place securitization among its main funding sources.

Moody's provisionally assigned local ratings of Aaa.tw' to the NT$3.68 billion senior tranche and a Baa3.tw' rating to the NT$80 million subordinate piece. The deal will have a three-year revolving period, followed by controlled accumulation until January 2009, and a two-year tail period until legal maturity in 2011.

Given the success of the debut MBS in October by Malaysia's secondary mortgage company Cagamas (see ASR 10/18/04), much is expected of the country's securitization market in 2005. And the early signs look promising.

Cagamas is lining up another first for the market - an Islamic RMBS. HSBC Securities and Standard Chartered are amongst the bidders, and a source reports that Cagamas would finalize a shortlist of banks in the next two weeks.

Property developer Talam Corp. also wants in on the act. The company announced last week its plans for an M$150 million ($39.5 million) Islamic CMBS through the Ample Zone SPV.

In order to reduce borrowings of M$103.4 million and achieve annual interest savings of M$5.4 million, Talam will securitize four commercial properties located in Kuala Lumpur worth M$236 million. Three of the buildings are owned by Talam subsidiaries, while Intelbest is selling the other.

The SPV will enter into four rental agreements with the sellers, under which it will lease the assets back for seven years in return for rental payments. Investors will buy Islamic paper - called Sukuk Al-lijarah - backed by lease revenues. Tenors for the notes will be between two and seven years.

Copyright 2005 Thomson Media Inc. All Rights Reserved.

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