NEW YORK, Feb. 11 /PRNewswire/ -- Total issuance in South Korea's
structured finance market, particularly cross-border securitizations, should
experience solid growth in 2002 as the sector builds on the experience of its
US$1.76 billion in deal flows in 2001 and a keen appetite by monolines for
Korean consumer assets, said Diane Lam, Standard & Poor's director of
Structured Finance in Hong Kong.
"We believe that Korean securitization volumes in 2002 will set new highs
-- 2002 could be the year the sector takes off," Ms. Lam said, explaining,
"Issuers are now familiar with the product and the investor base is
increasing." Domestic investors who have shunned unsecured corporate issuances
in a flight to quality continue to vote with their investment dollars, and
snap up structured bonds for their inherent transparency and stable
performance, Ms. Lam noted. Similarly, for cross-border transactions, foreign
investors, chiefly from the U.S., Europe, and, more recently, Japan, are
expressing more interest in South Korea's securitization market.
The development of the securitization market in South Korea is gaining
momentum from the surge of deal flow that took place in the last quarter of
2001. Transaction expertise and experience gained by both domestic and
international parties have reached a critical mass, allowing transactions to
close quickly, Ms. Lam said. Representing a signal of the market's
development, the securitization of Samsung Capital's AHA card loan
transaction, arranged by Citibank and wrapped by Financial Security Assurance
(FSA), required just two months to complete.
Moreover, Standard & Poor's rated the first cross-border securitization
in 1999 for KEXIM's export loan book, valued at US$230 million; this has been
repaid in full and performance of the assets was superb, Ms. Lam said.
Investors can begin to see how Korean corporate assets actually perform by
looking at the performance of the deals like KEXIM, KDIC's Hanareum Funding,
and other collateralized bond obligations (CBOs).
In December 2001, Standard & Poor's rated three South Korean
transactions: Samsung Capital's AHA card loans, valued at US$300 million and
rated triple-'A'; Koromas Funding Ltd., a CBO transaction valued at US$285
million and rated triple-'B'; and LG Card's Credipia 2001 Ltd. valued at
US$500 million and rated triple-'A.' Standard & Poor's rated a total of five
cross-border transactions in 2001, with a volume of US$1.76 billion.
South Korea's securitization market was led in 2001 by consumer
asset-backed securities, including credit card and card loans. CBOs were an
important component of the market, due to the need for funding of smaller
corporates, Ms. Lam said. CBO transactions are driven by government policy,
she explained, and aim to provide funding to companies that cannot access bank
credit easily. "In fact, without access to the debt capital markets using
securitization as a funding technique," she said, "there could be more
financial difficulties, corporate failures, and even higher unemployment in
Korea. "The domestic and cross-border securitizations have delivered important
benefits to Korean corporates, banks, and to Korea's debt capital market
growth, helping to maintain an even keel for Korea." Ms. Lam noted.
South Korea's economy is improving, but companies and banks still must
navigate through a painful restructuring program. Ms. Lam expects the
readiness of monolines and swap houses to help pave the foundation for future
issuances in 2002. These issuances will include the launch of new asset
classes, including commercial real estate, mortgage-backed securities, and
credit-linked notes. Ms. Lam also sees the potential for unwrapped
transactions.
For 2002 and beyond, Standard & Poor's said that the single most
important development in the evolution of Korean securitization is the
emergence of repeat issuers. The consumer finance houses in Korea unanimously
see securitization as a permanent part of their funding platform, much like
U.S., European, and Japanese counterparts. "We are seeing some of this
already, with Samsung Capital having completed two transactions in the
cross-border market in 2001," Ms. Lam said.
SOURCE Standard & Poor's
 back to top
Related links:
http://www.standardandpoors.com/ratings
CONTACT:
Diane Lam, CFA of Standard & Poor's Ratings
Services, +1-852-2533-3522
|
