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SK Corp. and Merrill in ABS venture

Published 2 Min Read

Korea’s biggest oil refining concern, SK Corp., is set to sell its Seoul-headquarters to a special purpose vehicle for W450 billion ($437 million), company officials said last week. SK Corp. is selling assets partly to offset the $3.1 billion takeover of domestic rival, Incheon Oil Refinery, completed last month.

The company has hired Shinhan Bank to arrange its securitization, collateralized by rental income derived from the building for the next five years. Sources indicate that Merrill Lynch will act as sole investor for the transaction, adding to the bank’s investments in several recent Korean consumer finance securitizations.

Securing sufficient rent to collateralize the notes should not pose a problem as SK Corp will lease the building for the five-year term of the deal, and has the option of buying it back at maturity.

Elsewhere, the Government of Thailand will launch the first deal from its THB24 billion ($583.8 million) securitization program in November (see ASR 5/2/05). The Ministry of Finance, in charge of the project, will sell an initial THB9.5 billion transaction comprising of 13-, 19- and 20-year tranches.

HSBC Securities, Bangkok Bank, Government Housing Bank and Thai Military Bank will jointly underwrite the deal, which will be rated by Fitch Ratings and TRIS Rating Co. Two further transactions will be launched in 2006 and 2007, with proceeds funding the construction of an office complex in Bangkok that will house 28 government agencies. The ABS paper will be backed by future rentals collected from those departments.

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