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Volume 54, March 2007 |
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Featured Industry: Financial Structured Finance in Asia Fitch Ratings said in a report published in December of 2006 that non-Japan Asia structured finance issuance will continue to be driven by the real estate sector in Singapore, as well as refinancing activities by Korean consumer finance and credit card issuers. Fitch Ratings added that Taiwan should re-emerge as the third most active country with more issuance across the asset-backed securities (ABS), commercial mortgage backed securities (CMBS), and residential mortgage backed securities (RMBS) sectors in 2007. In the report, the agency elaborated that Singapore's property assets continued to show strong performance in 2006 supported by rising property prices and rental rates, as well as sound economic fundamentals. Further, it cites that South Korean asset performance should remain steady as well despite North Korean security concerns. Taiwan's structured credit market should continue to be dominated by locally originated collateralized debt obligations (CDO) issuance with more asset backed commercial paper (ABCP) coming to market more regularly than term notes. Collateralized loan obligations (CLOs) backed by domestic balance sheet corporate loans and with liabilities issued either by way of term notes or ABCP are expected to be active issuers in 2007. Elsewhere in Asian structured credit markets, Singapore-based CDO asset managers are expected to continue to be active issuers in 2007. Fitch expects more balance sheet CLO issuance from regional Asian banks seeking to transfer part of their corporate credit risk in response to Basel II, with the trend of a greater percentage of the initial portfolio consisting of collateral from Asia Pacific likely to continue. According to the report released by Fitch Ratings on March 26, 2007 the agency rated USD4,455.7M of Asian (ex-Japan) cross-border securitisation issuance, equivalent to 73% of the total cross-border issuance amount in the region. “The biggest originator in terms of issuance volume was Standard Chartered First Bank (SCFB), which issued a total of USD1,913M RMBS in two separate deals. The second-largest originator was Singapore’s RCS Trust, which launched the biggest CMBS issuance ever in Asia (ex-Japan), with USD652M. South Korea again dominated the Asian (ex-Japan) cross-border securitisation market in 2006, with a market share of 64%. Fitch continued to observe the dominance of real estate investment trusts (REITs) in Singapore’s securitisation market, which contributed 20% of Asian (ex-Japan) issuance in 2006. In Hong Kong, there were two cross-border issuances, from Hong Kong Mortgage Corporation (HKMC) and Citigroup respectively. In Taiwan, there was a strong focus on REIT listings, with only one cross-border RMBS deal by Hsinchu International Bank (HIB). In China, there was strong domestic issuance of Specific Asset Management Plans (SAMPs), a new pan-securitisation product traded on the stock exchange market. All issuances in Thailand were domestic and concentrated in ABS and CMBS.” To find out more about structured finance in Asia, visit this issue’s useful links and the detailed section outlining upcoming events in the financial industry. Sources: Fitch Ratings, “Asian (Ex-Japan) 2006 Review and 2007 Outlook,” March 26, 2007: www.fitchratings.com “Fitch's 2007 Global Structured Finance Outlook” at Securitization.net: www.securitization.net |
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