AEL Corp launches third securitization

ING arranges third deal from HABS Corp master trust for Japanese consumer finance company.

AEL Corporation, the Japanese consumer finance company formerly known as Hitachi Shinpan, has launched its third securitization out of the HABS Corp master trust. As it did with AEL's first two offerings, ING acted as sole lead manager for the transaction.

The latest Ñ11 billion deal is backed by a portfolio of approximately 34,000 consumer loan receivables originated by AEL.

The transaction has been split into two tranches: Ñ11 billion of senior notes and an unrated subordinated piece that will be held by the issuer as credit enhancement. The senior notes, rated Aa2 by Moody's and AA by Fitch and Standard & Poor's, have expected average lives of three years and carry a coupon of 98.5 basis points over one-month Yen Libor.

Interestingly, the deal has been specifically designed to target international investors. Officials at ING said the issue was well oversubscribed with demand mainly coming from the ex-Japan Asia region and Europe.

Despite the continuing negative publicity associated with corporate Japan, ING said that foreign investors are still keen to get their hands on good quality credits. "Investors still look at Japan with considerable interest, particularly with regard to structured credit transactions if they are correctly priced," comments an official at the bank.

ING has been active in promoting the use of master trust structures in the securitization transactions it has arranged, reasoning that they offer corporates greater flexibility. Rather than needing to create new special purpose vehicles for every deal, master trusts allow companies to launch deals from the same vehicle by adding new receivables to that vehicle, as was the case with this offering.

AEL's first two deals from HABS Corp comprised a US$120 million issue in November 2000 and a Ñ5.25 billion issue in April 2001.