Shinki, a Japanese provider of loans to small businesses and consumers, has launched its second securitization of small business loans. Just like it did with Shinki's first asset backed securitization (ABS) in 1999, ING Barings was brought in as sole lead manager.
The Ñ20 billion ($170 million) program has issued Ñ10 billion of senior beneficial interest, rated Aa2 by Moody's and AA by Standard & Poor's. The senior interest carries an average life of around four years and an expected final maturity of six years. In addition, the unrated subordinated beneficial interest is held by Shinki.
Because the deal was privately placed, no details have been forthcoming about pricing or the value and features of the underlying loan pool.
However, ING was more than happy to talk about the structure of the latest transaction. "We are pleased to have been able to complete this second transaction for Shinki and to have introduced some structural improvements which resulted in a lower funding cost and greatly reduced operational burden on the company," says John Mullins, ING's head of securitization for Asia and the Americas.
The improvements he is referring to regard the use of a Japan trust structure in this deal. Receivables, in this case loans, are entrusted to a trust bank which then issues beneficial interests to a trustor. The trustor would then usually assign beneficial interests to a special purpose vehicle but because this is a private deal, interest will be paid directly to the investor.
In Shinki's last ABS deal, which raised the company $25.6 million through a Ñ100 billion program and was the first securitization of small business loans in Japan, the structure was more complicated.
Yen-denominated bonds were issued through the SPV and then bought by Future Capital Limited, a Cayman Islands SPV, which then issued US dollar bonds through its euro medium-term note program. The idea behind that was to open Shinki up to a wide range of investors.
The first transaction also received triple-A ratings from both Moody's and S&P on account of a guarantee provided by the monoline insurers, Financial Security Assurance.
