In a move that may surprise a few people in the ex-Japan Asian securitization market, Samsung Capital, the Korean consumer finance company, will soon launch its fifth international transaction. The surprise element stems from the fact that ING and not Merrill Lynch - which Samsung mandated for a $400 million unsecured consumer loans deal in August - will be in the role of lead manager.
Just before anyone gets the wrong idea, an official at Samsung confirmed to FinanceAsia that ING is not stepping into Merrill's shoes because the company is issuing two separate transactions. "The deal we are doing with Merrill Lynch has been delayed," he says. "That will be a public issue and because sentiment in the US markets is not so good right now, we will resume plans to launch that deal early next year. We hope to close the deal with ING in the first week of December."
Some bankers have suggested that another reason why Samsung's deal with Merrill has been put on the back burner is that Ambac, the monoline insurer, has decided not to provide a third party guarantee due to concerns about consumer finance in Korea. The sector has experienced rapid growth in the past two years, but rising defaults suggest this may not be sustainable. Ambac's involvement would bring a deal up to triple-A status, making it easier to sell to foreign investors.
Merrill Lynch denies that Ambac has pulled out of the deal, while Ambac - which will provide a wrap on the upcoming $465 million Samsung Life mortgage backed securitization - says it cannot comment because of confidentiality agreements.
Regardless of the truth of the rumour, there should be no such problem closing the transaction with ING, which presumably will be sold through private placement or as a conduit deal. The Samsung official says the issue - for between $210 million and $220 million - will be unwrapped. If ING does what it did with the recent $500 million credit deal for Kookmin Card and brings in Fitch and Moody's, the Samsung deal should be rated around the AA/Aa3 mark.
As was the case with Samsung Capital's third issue in November 2001, the company's fifth deal will securitize revolving consumer loans extended through its Aha loan card product. The previous transaction, rated triple-A by Moody's and S&P because of a wrap provided by Financial Security Assurance, was arranged by Citibank and priced at 57.5bp over Libor.
ING acted as lead manager on Samsung's first two cross-border deals, a $200 million conduit offering in March 2001 backed by auto loans, which was followed in September that year by a $234 million consumer loans securitization that placed privately.
The company issued its fourth deal - and first publicly offered cross-border issue - in May this year with a $296 million auto loans transaction. Merrill Lynch acted as sole lead manager on the deal, launched out of the Samsung Capital Auto 2002-1 special purpose vehicle, registered in the Cayman Islands.
Rated triple-A by Moody's and S&P because of an FSA wrap, the bonds have expected average lives of four years and priced at 36bp over one month Libor, coming in 2bp from the tight end of initial price talk (38bp to 40bp over). Sources close to the deal told FinanceAsia at the time that it was three times oversubscribed, sold to 14 accounts, with 70% placement in the United States and the rest split between Asian and European buyers.
