Asian auto ABS activity is heating up. Boosting activity in this sector was Thai consumer finance company Siam Industrial Credit Co. (Sicco), which last week completed a THB3 billion ($80 million) auto loan securitization. Standard Chartered and Siam Commercial Bank – which holds a 39% interest in the borrower – were joint leads on the three-year offering, issued via the Sicco Special Purpose Vehicle.
The facility has been tapped once before. Sicco issued THB4 billion of bonds backed by the same assets in June 2005. Both issues are part of the borrower’s aim to raise TH15 billion for business expansion and restructuring.
The latest deal is backed by a pool of 9,990 contracts worth THB3.9 billion, equivalent to 29% overcollateralization. Under the structure, Sicco will sell receivables to the SPV on a revolving basis for 1.5-years followed by controlled amortization until maturity.
Marketed in a range of 5.92% to 6%, the bonds priced at the wide end of the range. As of press time, the coupon offered a spread of 70 basis points over three-year government paper.
Sicco’s debut offering priced at 4.21%. However, Thai interest rates have moved out markedly since then, and the equivalent spread over government bonds on the first issue was 85 basis points.
A banker involved on the transaction did not offer precise distribution details, saying only the bonds were purchased by banks, insurance companies and state-linked entities.
Korea’s auto deal
Elsewhere, Korea’s Hyundai Capital has mandated Royal Bank of Scotland (RBS) to arrange its forthcoming auto loans ABS, with ING on board as swap counterparty. According to a well-placed source, the deal – likely to be sized between $300 million and $350 million – will be sold to RBS’ and ING’s respective conduits, with RBS expected to purchase the larger portion.
The transaction is the first by the consumer finance company since a 330 million issue backed by similar assets last December (ASR, 01/09/06). ING was rumored to have bought the entire deal for its conduit. The three-year bonds priced at 15 basis points over Euribor, which remains a benchmark for unwrapped Korean ABS.
Despite Hyundai’s return to the scene, activity in the Korean cross-border and domestic markets has been quiet all year. Evidence of this came last week with the Financial Supervisory Service’s (FSS) announcement that issuance in the first half was 23.4% down on the same period last year.
The regulator said total issuance for the period was W10.9 trillion ($11.4 billion). The most noticeable drop was in the mortgage-backed sector, with volumes dropping to W721.5 billion from W2.2 trillion. FSS officials attributed the decline to consumers taking on mortgages from commercial banks rather than the Korea Housing Finance Corp., the country’s secondary mortgage company and benchmark MBS issuer.
In addition, consumer finance companies have issued more straight debt deals in 2006 than previous years. Securitization activity did, however, expand in the construction sector. ABS issues financing new developments went up from W2 trillion to W4.2 trillion.
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