In what will be seen as a major fillip to HSBC's drive to boost both its Asian securitization group and its Korean international bond franchise, the bank has been selected to lead manage the next cross-border ABS from Samsung Card, Korea's biggest credit card company with assets of over $5 billion.
The issuer, which completed its first cross-border securitization last September with a $500 million transaction, becomes the latest Korean entity to line up an international securitization in 2002. Samsung Capital is set to launch a $300 million offering shortly via Merrill Lynch, and there are two other credit card deals being worked on: CSFB will arrange a deal for Korea Exchange Bank, and Woori Financial has sent out RFPs to eight investment banks. Market rumours suggest both deals will be in the region of $500 million.
According to a source familiar with the deal, it is likely that the Samsung Card issue will be for at least that amount, although there has been speculation that it could be for as much as $750 million. That would make it the largest ever international securitization from the ex-Japan Asia region.
It is believed that HSBC emerged from a seven-strong bidding group for the Samsung Card mandate. "HSBC is focusing a lot on its Korean business, and this will be regarded as a landmark transaction for the bank," one banker comments. "Samsung Card is one of the top Korean credit card companies, both in terms of size and quality, so it is a very significant mandate for HSBC to have."
As the mandate is thought to have only just been awarded, it is not yet clear exactly how the transaction will look in terms of structure and timing, although market rumours suggest it may well end up as a conduit deal. "It's a little early to say on that," one banker says, "but with a number of other Korean parties tapping the international bond market, it wouldnÆt be a surprise to see a conduit type of execution."
The source also adds that it was premature to say whether a monoline insurer will wrap the deal, but believes the decision will probably have little to do with reports that monolines rre getting cold feet over Korean credit card securitizations. "I have not had any indication of that being the case," he concludes.
Samsung Card's first cross-border ABS was issued with a third party wrap from MBIA Insurance Corp, bringing the issue up to triple-A status with Moody's and S&P. The bonds, with average lives of 4.5 years and a final maturity of five years, were placed privately with pricing said to be just north of 50bp over Libor.
For HSBC, this will almost certainly be the most significant ABS deal to date for its securitization group in Asia. Although it did arrange the first Asian cross-border mortgage backed securitization (MBS) for Hong Kong's Dah Sing Bank in 1996, also the first Asian MBS deal to feature a monoline wrap, in the past few years the bank has not been considered one of the big players in the Asian market.
There are signs HSBC is making a concerted effort to change that. Along with this mandate, it is also believed the bank is working on at least two other deals in the region.