Kamco plans further international ABS issuance

Kamco''s executive director, Cheon Hong Kim, outlines some of the company''s business plans for the year ahead.
Considering how well its first international asset backed deal was received last year, it comes as no surprise that the Korea Asset Management Company (Kamco) is planning to issue two more similar transactions this year. And the company is also sizing up future business opportunities in the region, having just signed a MOU with the China Asset Management Company.

The state-owned entity is the only institution in Korea with a mandate to acquire non-performing loans (NPLs). That mandate expires in 2002, and it is quite possible that it may be in line for privatization. In practice, the company is run like a private company anyway, and has shown a dynamism and willingness for forward thinking not normally associated with a state enterprise.

A phone call which temporarily halts the conversation between Kamco’s executive director, Cheon Hong Kim, and FinanceAsia points the way. The call concerns the promotion of Chung Hui Chang to the position of general manager in Kamco’s international marketing department. Chung is the first ever woman to be appointed to general manager level within Kamco, and it is believed that she marks the first without family connections to achieve such a role in any Korean firm.

The company clearly thinks of itself as a market leader within Korea and especially within the securitization market. Having been an extremely active domestic issuer - it accounted for 30% of all issuance in 2000 - Kamco hit the international headlines with its $367 million Korea Asset Funding 2000-2001 transaction, lead managed by Deutsche Bank and UBS Warburg.

The deal, winner of Best Asset Backed Deal in FinanceAsia’s end of year review, was the first ever Asian cross border NPL transaction, and Kamco is keen to repeat that success. “It’s very possible that we will do two more international deals this year, one by the end of the first half and one at the end of the year,” says Kim. “Our first international deal took over a year to finalize - but far less time will be required for the second one, so we could do it in the next four months.”

Judging by the fact that representatives of Kamco were dining that night with UBS Warburg, and as Kim says, the company was "very happy with the lead managers on the first deal", it might be fair to assume that the mandate for the next deal is a formality.

Before a second issue sees the light of day, Kamco will continue to acquire more NPL portfolios and plans to purchase around W21 trillion ($16.67 billion) at face value of bad loans this year. It will also begin to develop its relationship with Chinese asset management companies, clearly seeing this a market of real opportunity. “We can advise the Chinese on their NPL situation, because at the moment they don’t really have our level of experience,” a company official says. “They’ve seen what Kamco has done to lower the burden and that could be an opportunity for us.”