Woori Card, Korea's fourth largest credit card company, has become the third Korean entity to launch an international 144A public credit card transaction when it priced a $500 million deal on Friday at New York's open.
UBS Warburg act as sole bookrunner and swap provider on the transaction, and has been involved on two of the three public card deals, having joint led the $500 million LG Card deal with CSFB in December 2001.
Woori's deal was launched through Woori Card Finance 2002 Ltd, a Cayman Islands registered special vehicle, and securitizes a portfolio of 1,685,705 accounts with an outstanding principal of W881 billion ($714.9 million).
UBS employed the structure that has become the standard for nearly all cross-border securitizations from Korea. Woori sells the card receivables to a Korean incorporated entity, WCC Consumer Finance 2002 Securitization Specialty Co (the purchaser), which then issues a $500 million bond to the Cayman Islands SPV and swaps the proceeds into Won to buy an equivalent amount of receivables.
In addition, the purchaser issues a subordinated bond to be retained by the originator, which - along with the reserve account - is equal to 22% credit support for the deal.
The transaction features a four-year revolving period followed by a one-year controlled amortization period. During this time, interest collected on the cards will be used to pay interest on the senior bonds. Any surplus interest will be used to cover defaults.
The bonds have a legal maturity of six years, expected maturity of five years and average lives of 4.64 years. The deal - which has an underlying rating of A2 from Moody's - benefits from a monoline wrap from Financial Security Assurance (FSA) to bring it up to triple-A status with Moody's and S&P.
One slight difference with this transaction is that should a problem arise, FSA will pay investors the amount due on $400 million of the bonds at the expected maturity date. In other deals, FSA would only pay at final maturity.
The bonds priced at 99.778% with a nominal coupon of 45bp over Libor, giving an effective spread of around 49.8bp. That is just outside the $500 million issue by KEB in August (4.5 year average life), led by CSFB, which priced at par with a coupon of 49bp over Libor.
UBS would argue, however, that getting pricing at the level it did was an achievement in what has been a difficult week for the bond markets, with Hutchison having to scrap plans for Eu1 billion and รบ350 million offerings. Added to that, the LG Card deal is currently trading around 53bp to 54bp over in the secondary markets - at launch it priced at 55bp, so anything inside that has to be seen as a positive.
According to observers, Woori's deal was 1.5 times oversubscribed with 41% of the demand coming from North America, 38% from Asia and 21% from European buyers. The majority of the bonds placed with banks (64%), asset managers (17%), insurance companies and corporates (7%) taking the remainder.
Kookmin Card will also step up to the plate with its own deal, expected to close in the next couple of months. Kookmin offered a split mandate to Bank One and ING as it looks to raise $1 billion from international investors. According to reports, ING will tap Asian investors, while Bank One will market the deal primarily to North American investors.
