LG Card, one of Korea's biggest credit card companies with around 19 million cardholders, has become the first Korean entity to complete a cross-border securitization in 2003. Bank of America acted as lead manager and swap provider on the $300 million deal - LG's second international offering following a $500 million transaction in December 2001.
It will come as something of a relief to all parties that the deal has finally closed, given that it took over a month to get regulatory approval. This delay was probably anticipated however, with regulators keeping a watchful eye over credit card issuers since default rates started to rise markedly in the second half of 2002.
This trend impacted the securitization market in the fourth quarter of 2002. When Kookmin Card issued its second $500 million deal through Banc One in early December, spreads had shifted out to 60bp over Libor. This was 10bp outside similar sized offerings earlier in the year from Korea Exchange Bank - via CSFB - and Woori Card's deal led by UBS Warburg.
According to one banker, rumored pricing for LG's issue is 45bp over Libor, considerably inside the low- to-mid-50's levels than the public deals have been trading at recently in the secondary markets. It is difficult to substantiate any comparisons, however. Both issuer and lead manager declined to offer pricing details as the deal has been sold into a conduit via private placement.
A banker at BOA would confirm though that the deal has not been wrapped by a monoline insurer and is unrated.
The one interesting detail about the deal, which matures in 2007, is that the bonds were issued out of a South Korean-registered special purpose vehicle - Credipia 2003 Asset Securitization Specialty Co - rather than a Cayman Islands-incorporated SPV.
LG Card opted for a public offering with its first cross-border deal in 2001, which was jointly led by CSFB and UBS Warburg. The five-year issue, which was wrapped by Financial Security Assurance to enable triple-A ratings from Moody's and S&P, priced at 55bp over Libor and was recently trading just inside that in the secondary markets.
As for other Korean ABS news, Samsung Card has still to decide whether to go ahead with its fourth international deal. The company sent out RFPs to a number of foreign houses at the end of 2002.
Meanwhile, Hyundai Capital is believed to be close to completing a deal backed by auto loan receivables. Banc One is managing the issue, reckoned to be around $200 million in size.
