South Korea’s second largest credit card originator LG Card took its 2005 securitization issuance beyond the $1 billion mark with a $300 million private placement. JPMorgan Securities and Korea Development Bank jointly handled the deal, which comes less than a month after the issuer completed a $400 million offering.
The latest transaction, with a 3.3-year average life, priced at 35 basis points over Libor – seven points outside the Merrill Lynch-led issue, even though the average life of that transaction was 4.3 years.
Rival bankers speculated that differences in the quality of underlying collateral could explain the spread variance, while hinting Merrill may have topped up its investment return by charging higher arranging fees.
LG Card is currently up for sale. Its creditors – including Korea Development – recently invited bids for the 51% stake, having rescued the company on several occasions with equity injections totaling $5.8 billion. Local media agencies have linked, among others, Citibank Global Markets, Shinhan Financial Group and Temasek, Singapore’s state owned investment fund, to the sale.
Staying in Korea, the Ministry of Finance is drafting plans to make entry into the country’s ABS market easier for low-rated corporates and local government issuers. The Ministry wants to scrap the rule that borrowers be rated triple-B or above to issue transactions.
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