Thailand's Government Housing Bank announced plans last week to raise THB30 billion ($731.6 million) by securitizing part of its mortgage portfolio, as part of a THB124 billion program to fund the expansion of its loan business. Aside from the ABS component, Government Housing Bank says it will raise money through a government injection, straight bond issue and from existing loan payments.
The mostly state-owned bank is the biggest player in the local market, with a 38% market share and assets over THB448 billion. The bulk of its business comes from loans extended to low to medium income borrowers.
Government Housing Bank is currently in talks with local banks to be its financial advisor for the project, according to one ABS banker. No foreign banks are reportedly involved at this stage, although it is certain at least one international investment bank will be brought in for the securitization exercise.
Government Housing Bank hopes overseas investors will buy as much as THB20 billion, according to local media reports, something which would require a foreign bank's investor base. To gauge offshore appetite, a preliminary roadshow will be held, most likely in Hong Kong, early next year.
As a state-supported entity, most observers feel Government Housing Bank will have no problem attracting domestic bids. However, in order to boost its credit ratings and entice offshore accounts, it will have to reduce its non-performing loans, bankers say.
The lender has been making relatively slow inroads on this front, amassed largely as a result of the Asian Financial Crisis. At present, NPLs make up around 9% of its loan portfolio, but senior bank officials say it has plans to reduce bad loans by THB36 billion, lowering the ratio to 7%.
First up, Government Housing Bank will sell THB8 billion of loans directly to investors. It will then hire an asset management company to manage the remaining THB28 billion. Bankers say Government Housing Bank has been in discussions with third parties over its loans for the last three years, and it is about time the issue was resolved.
Also in Thailand, Siam Panich Leasing has selected Standard Chartered to arrange its debut securitization, sources confirmed. The hire purchase and vehicle-leasing firm will issue a THB5 billion auto loan-backed offering in 1Q06, with a maturity likely to be between three and five-years.
According to market reports, StanChart beat bids from Deutsche Bank Securities, Citigroup Global Markets and HSBC Securities to secure the foreign advisory role. It will jointly underwrite the deal with Siam Commercial Bank, the issuer's parent.
Other issuers lining up deals are the Ministry of Finance, Land & Houses, and AEON Thana Sinsap.
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