Despite widespread speculation linking Nomura Securities’ departing head of non-Japan Asia securitization Chris Chau to the same role at HypoVereinsbank (see ASR 11/8/04), ASR now understands Chau will not be going there after all.
Chau did hold discussions with HVB and was believed to be very close to joining the firm, although not for the position of non-Japan Asia head. HVB has already filled that vacancy with an internal promotion of John Pang, who has been with the firm for several years and worked on some of the firm’s notable transactions in Singapore and Taiwan.
It is believed Chau is off traveling for a couple of months, although the rumor mill is now throwing out the names of Barclays Capital and Credit Suisse First Boston as potential suitors.
Barclays seems an unlikely fit, sources noted. Currently, Asian securitization falls under the remit of Don Tang, head of the financial institutions group, but the bank has not closed a deal in over three years. Rival bankers believe this is not the time for another house to be joining an already overcrowded market, and doubt Chau would give up his post at Nomura – where he established one of the more reputable franchises – for such a challenge.
CSFB would appear more logical. The bank has still not replaced Greg Park since he left for Calyon Securities in June (see ASR 6/14/04). At the time this sparked speculation that the bank was scaling back its presence in Asia, but recent efforts to get business in Korea suggest CSFB is still in the game.
The bank competed to provide the swap on the upcoming MBS deal by Korea First Bank, but lost out to Calyon. However, unconfirmed reports suggest CSFB has a significant mandate for a Korean bank and is looking for a senior figure to oversee this and future ABS initiatives.
Barclays and CSFB were unavailable for comment as of press time.
Meanwhile, HSBC’s best year yet for its Asian securitization business continues. Unbeknown to most of its rivals, the bank has been working on its first Korean deal of the year, a credit card-backed offering by the country’s biggest originator, Samsung Card.
The deal’s size will be between $350 million and $500 million with a tenor of around 2.5 years, according to one source. Moody’s Investors Service and Standard & Poor’s are expected to rate the bonds at the sovereign ceiling level of Aa3/AA-.
Contrary to speculation, the source added the transaction would not end up in one of HSBC’s conduits, but would be placed privately. The transaction is scheduled to close within the next two weeks.
This is the second Samsung mandate for HSBC, following a $400 million issue in November 2002. Prior to the consumer credit crisis that dampened the Korean cross-border ABS market, Samsung Card was one of the most prolific issuers and the first Korean entity to top $1 billion.
HSBC is also busy, along with joint arrangers Goldman Sachs and UBS, putting the final touches to Hong Kong’s first real estate investment trust for the government-controlled Housing Authority (HKHA). Called Link REIT, the HK$30 billion ($3.85 million) deal will see the divestment of HKHA’s retail and parking garage assets. Closing is expected in December.
In Taiwan, Deutsche Bank Securities has begun marketing the NT$2.1 billion ($63.2 million) CMBS it is arranging for Hung Tai Construction last week after receiving approval from the Bureau of Monetary Affairs.
The transaction, which will be only the second issued under the July 2003 Real Estate Securitization Law, is collateralized by cash flows generated by the Hung Tai Century Tower in Taipei in addition to the land and property value. The complex houses high profile tenants such as Deloitte Touche Tohmatsu, GlaxoSmithKline and British American Tobacco.
Called Hung Tai Real Estate Asset Trust, the deal has been split into two tranches with legal maturity scheduled for April 2012. Fitch Ratings has provisionally assigned local ratings of AAA’ to a NT$1.74 billion A class and A’ to the NT$355 million B class trust certificates.
Having only recently completed Malaysia’s first RMBS (ASR 10/18/04), Cagamas Bhd, the country’s secondary mortgage agency, is gearing up for its next foray, with banks having until Nov. 23 to submit proposals.
According to those familiar with the RFP, this time around Cagamas is looking to use an Islamic RMBS structure, another first for the market. Approximately 58% of Malaysians are Muslim, and the government is keen to establish the country as an Islamic finance center similar to Bahrain, Dubai and Kuwait.
The deal’s structure will be of the utmost importance, given that interest payments are prohibited under Islamic law. Instead, investors are considered partners, getting a share of profits that varies according to the underlying performance of whatever line of business is involved.
As mortgage payments are made according to prevailing interest rates, it would be easy to assume such an asset class would not be feasible for Islamic securitization. However, in countries where mortgages are the only way to purchase property, senior clerics consider this acceptable, rather than for money to be wasted on rent.
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