CSFB tipped for BII securitization

Indonesian bank lines up credit card deal, others may follow.

Despite the scepticism of some bankers on the ex-Japan Asia securitization scene, recent mutterings of potential activity in Indonesia have gained further credence with reports that Bank Internasional Indonesia (BII) has mandated CSFB to arrange a deal backed by credit card receivables.

Although bankers at CSFB would not comment, a source in Jakarta insisted that BII is the first Indonesian entity to select a foreign arranger for securitization, adding that the deal would be issued domestically and that CSFB would work alongside a local securities house.

BII has already completed a securitization deal in June 1997, interestingly enough backed by credit card receivables. The bank issued $140 million of ten-year bonds via Citibank. The deal was unwrapped, priced at 140bp over Libor and was rated at the triple-B level by Fitch.

Returning to the present, the source also told FinanceAsia that Bank Negara Indonesia (BNI), the largest publicly traded bank in Indonesia, is also looking to do a credit card deal and would decide on its advisor shortly. ABN Amro, Barclays Capital and CSFB are all thought to have pitched along with several local banks.

Meanwhile, Bank Danamon Indonesia, PT Astra and the oil and gas giant Pertamina are believed to be three other institutions interested in ABS deals. However, 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.

Although doubts on that transaction will persist, the fact that several institutions are contemplating deals suggests that the Indonesian ABS market could be due to make its long-awaited comeback as an ABS market.

If BII, or any other of the rumoured deals gets done, they would be the first to come out of the country in over five years. The Indonesian ABS market ground to halt in 1997 just as it looked set to be a good source of activity. PT Astra International got the ball rolling in August 1996 with a $200 million issue backed by auto loans via Barclays Capital. The deal was rated triple-A by S&P and Moody's on the back of a monoline wrap by Financial Security Assurance.

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.

The offshore market might be closed off for the time being, but at least one ABS banker feels the time is ripe for a steady domestic pipeline for the next couple of years. "There has been a wave of interest on the domestic side for a number of reasons," he says. "First, you have a very liquid domestic bond market now and investors are asset hungry. They are looking for high quality well structured paper, but there are only so many high quality issuers out there. ABS allows second and third tier companies with high quality assets to get a high rating via securitization, which makes them attractive to Indonesian investors."

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