ABN Amro secures BNI mandate

Bank Negara Indonesia lines up credit card deal.

As the old saying goes, you wait years for a securitization deal and then two come along at the same time. That seems to be the case in Indonesia at least. Despite the fact there have been no ABS deals since the Asian financial crisis took hold in 1997, the last few months has seen a resurgence of interest among local and foreign banks.

Following the recent discovery that Bank Internasional Indonesia (BII) has mandated CSFB and AAA Securities to arrange a Rp500 billion ($56 million) deal backed by credit card receivables, FinanceAsia has learned that Bank Negara Indonesia (BNI) has hired ABN Amro and Kresna Securities for a securitization of the same assets.

A source familiar with the BNI deal confirmed that ABN Amro has been hired as the foreign advisor, but said that details such as deal size and the target launch date were still being finalized. FinanceAsia understands that ABN Amro beat off bids from Barclays Capital and CSFB to secure the mandate.

Meanwhile, Bunas Finance Indonesia is believed to have mandated Indo Premier Securities for a Rp200 billion auto loan deal, and other potential issuers including Bank Danamon Indonesia, PT Astra and the oil and gas giant Pertamina have held beauty parades in the last three months.

Pertamina has been linked with doing a future flows issue backed by gas revenues at various times in the past and nothing has ever come of it. That fact, and doubts over the economic benefits of securitization to Indonesian issuers, has led to widespread scepticism among many bankers in Asia about the likelihood of an ABS revival in Indonesia.

Nevertheless, bankers at houses who have been actively seeking Indonesian opportunities recently feel that the doubters are wrong to say that the motivation to use securitization is lacking.

"The last 18 months has seen a strong pick-up of activity in the Indonesian fixed income market and within that there has been a greater acceptance and understanding of and appetite for structured paper," says one banker. "That is the first factor. Secondly, institutions are more concerned with how to manage their capital with Basel 2 approaching. It is in their interests to move some of their assets off balance sheet in order to get regulatory capital relief. Securitization also has benefits both as a diversification play and as a learning exercise for the financial issuers."

The last securitization deal completed out of Indonesia was an FSA-wrapped motorcycle ABS lead managed by Salomon Smith Barney for the finance company Putra Surya Multidana (or PSM as it was known).

PSM issued US$144 million of Reg S/144a bonds, rated at the triple-A level by both Moody's and S&P. According to a banker involved on the deal, it closed in October 1997 exactly one day after the stock market crash which he believed marked the death knell for the securitization business in ex-Japan Asia for the next four years.

"Within three months of the crash, most of the sovereign ratings of the countries in Asia where securitization was taking off (Hong Kong being the exception) had been lowered to non-investment grade," the banker explains. "That made it impossible to complete cross-border transactions with or without a wrap and local currency ABS deals targeting local investors were not really sellable for a long time."

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