Danaharta set to launch first ABS deal

The Malaysian AMC will securitize around M$500 million of rehabilitated loans this month.

Danaharta, the state-run asset management company (AMC) of Malaysia, will make its long awaited first foray into the asset-backed securitization (ABS) market within the next three weeks.

Alliance Merchant Bank and Deutsche Bank were mandated in May to jointly handle the transaction, with Deutsche fending off competition from Credit Suisse First Boston and Merrill Lynch to win the international advisory position.

According to market rumour, the deal - penciled in for a November 20 launch - will be in the region of M$500 million ($131.6 million). This will be split into 60% of senior paper rated triple-A by local agencies and 40% of subordinated paper to be held by the issuer.

An official from one of the lead managers confirmed the timing of the deal. "Barring any unforeseen events the deal will go ahead on or around November 20," the banker says. "It will probably be for just under M$500 million and we are specifically targeting domestic investors. It's possible we will also tap the international market at some stage in the future."

Danaharta was established in 1998 with the task of cleaning up the non-performing loan (NPLs) problem facing Malaysia's financial institutions. Assets from the AMC's rehabilitated loans portfolio will back the ABS offering.

At the end of 2000, the company had turned around M$5.45 billion of acquired NPLs into performing loans, M$3.7 billion of which had been performing for over 12 months.

It is likely that for the next few years - before the issue's scheduled closing in 2005 - securitization will become as important a part of Danaharta's strategy as it has been for its Korean counterpart, Kamco.

Last year, Kamco accounted for 30% of all domestic issuance in Korea, as well as launching the $367 million cross-border deal that scooped the Best Asset Backed Deal in FinanceAsia's end-of-year review.

Deutsche's role in that deal, which was jointly lead-managed by UBS Warburg, was believed to be crucial in it being awarded the Danaharta mandate.

Assuming it goes ahead without a hitch on November 20, Deutsche would seem to be an odds-on certainty to handle a debut international offering by the issuer, one that is widely expected to see the light of day at some point next year.