South Korean bad debt agency, the Korean Asset Management Corp., is closing in on its first international securitization deal, with confirmation from a company official that roadshows will begin in July, taking in Asia, the U.S. and Europe.
The deal is being arranged by UBS Warburg and Deutsche Bank and is expected to be worth $500 million. It will be backed by bad loans that the agency bought from Seoul Bank and Korea First Bank last year.
If the deal is a success, it will be a relief for Kamco, as it comes on the heels of news that it is about to run out of money.
According to figures released by the Financial Supervisory Service, Kamco has only W4.7 trillion ($4.2 billion) left in its coffers after having to shell out unexpectedly to fund the Korea Deposit Insurance Corp.’s bailout of two struggling investment trust companies. However, the agency has been told to find W3.2 trillion to buy commercial paper issued by the collapsed chaebol, Daewoo Group, plus a further W2.3 trillion to buy back Daewoo’s foreign debts.
Other Korean firms that plan securitizations in July include Ssangyong Cement and Korea Kumho Petrochemical, both of which hope to access the domestic market as a way to cope with a severe credit crunch.
Ssangyong’s deal is expected to be worth about W500 billion, while Korea Kumho is aiming for W100 billion.
Both companies are rated at double-B and may be the first to take advantage of regulatory changes which are set to allow non-investment grade companies to issue ABS deals for the first time