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Hyundai preps return to cross-boarder market

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Hyundai Capital is expected to make a decision early this week on who will arrange its upcoming auto loan-backed private placement. The Korean consumer finance company invited bids in January from a quartet of houses – Calyon Securities, HSBC, ING and Standard Chartered.

The winning bank will either transfer the deal to a conduit or act as the sole investor and keep the bonds on balance sheet, according to bankers familiar with the Korean scene. That strategy worked well for Merrill Lynch last year when it arranged and purchased offerings by Korea First Bank and Samsung Card. Even rivals felt it a smart play because of the attractive spread pick-up at the time, particularly with Samsung Card struggling to find attractive funding domestically.

Pricing has moved in significantly since then, but bidding for the Hyundai deal has been aggressive, say bankers, with ING and Standard Chartered the rumored frontrunners. After a lean couple of years, ING is making a concerted run at the Korean market again, as the bank has already secured the mandate for an unwrapped credit card deal from Samsung Card (see ASR 1/24/05).

StanChart will be just as keen to reassert itself in Korea, and hopes Hyundai looks favorably on the $300 million auto loan deal it put together for the issuer last June. That unwrapped deal featured two double-A rated tranches, with the 0.55-year tranche pricing at 35 basis points over Libor and the 1.58-year tranche pricing at 51 basis points over Libor.

Staying in Korea, Korea First Bank will market its fourth cross-border MBS deal at levels set between 12 and 14 basis points over Euribor, according to market talk. Bankers at the three lead managers – Calyon, The Royal Bank of Scotland and StanChart – declined to comment, but if the reports are true, pricing would even be inside Korea First’s most recent deal.

In December, Korea First completed a 550 million ($722 million) blowout (see ASR 12/6/04), featuring an Ambac wrap for 3.09-year bonds that priced at 21 plus Euribor. The deal – arranged by BNP Paribas, Calyon and RBS – set a new benchmark for the public Korean cross-border market.

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