Bankers at HSBC are celebrating after winning the mandate for Hong Kong's first international securitization since early 2002. The deal will be backed by mortgage payments and will raise at least HK$2 billion ($256 million) for the Hong Kong Mortgage Corporation, though it could be even bigger. Bankers familiar with the deal say it will close before the end of the year.
Getting on the deal as sole bookrunner and lead manager is a coup for HSBC, particularly as the Hong Kong government is known to be considering a number of other asset securitization deals. The bank's securitization team will be hoping that an impressive performance on this key deal might lead to a raft of mandates in Hong Kong and across the region.
It is a prospect the bank has been gearing for lately. Kysan Ho joined from the Standard & Poor's structured finance group in June and Sarwar Ahmad, HSBC's head of securitization, hopes to add to the team.
The deal will be drawn down through the $2 billion multi-currency MBS Bauhinia programme, though the specifics of the structure are not yet known. However, it is clear that it will not be a clone of the last Mortgage Corporation deal, which was also a HK$2 billion securitization offered through the Bauhinia programme.
"This one will be slightly different," says a source familiar with the transaction. "It will develop the market."
That last deal was arranged by Merrill Lynch, and HSBC's team takes particular satisfaction from winning the deal in the face of stiff competition. It is difficult to say with certainty which banks competed in the beauty parade but it is safe to assume that most of the leading securitization houses were desperate to get involved.
"Hopefully it will be an eye-catching deal for the market," says Raymond Liu, HKMC's treasurer.
HSBC is also close to launching another Hong Kong deal: Asia's first ever securitization backed by taxi and public light bus loan receivables. The bank is thought to be self-managing a synthetic HK$3 billion five-year deal to cut the amount of capital it needs to hold in reserve.