Samsung Card, Korea's biggest credit card company with assets of over $5 billion, is this week expected to close its third international securitization, according to a source familiar with the deal. HSBC is acting as sole lead manager on the $400 million issue, which has been placed privately.
When HSBC was mandated in April, it was rumoured that the deal could be for as much as $750 million, which would have made it the largest ever cross-border deal from the ex-Japan Asia region. In the end, both bank and client have settled for $400 million now, with one observer telling FinanceAsia "there is every chance we may see a further transaction of these assets at some point in the future."
Samsung Card's latest offering makes it the first Korean issuer to raise $1 billion from international ABS investors, following the company's $500 million transaction in September 2001 via ING and $300 million offering in June this year led by Bank One.
The third installment in Samsung Card's cross-border securitization programme has a legal maturity of four years and expected average life of three-and-a-half years. Moody's and S&P have given underlying ratings of A/A2, but it is believed the deal features a third party wrap from a monoline insurer, which brings it up to triple-A status with both credit rating agencies.
Due to the fact that this is a private placement, it is not certain whether pricing details will be officially released. However, an observer claims that, "this will be amongst the most tightly priced cross-border deals from Korea, and is tighter than the two public credit card deals from Korea Exchange Bank (KEB) and Woori Card."
KEB issued its $500 million deal in August. The triple-A rated transaction, led by CSFB, had a 4.5-year average life and priced at par with a coupon of 49bp over Libor. Woori followed that deal earlier this month with its own triple-A rated $500 million offering via UBS Warburg. The bonds, which have average lives of 4.64-years, priced at 99.778% with a nominal coupon of 45bp over Libor, giving an effective spread of around 49.80bp.
One banker familiar with the Korean cross-border credit card securitization business said that tighter pricing was to be expected on the Samsung Card deal. "Those were both 144A registered term deals where this has been done privately or through a conduit," the banker says. "So it is quite possible that pricing was inside KEB or Woori, although every basis point tighter means that HSBC does not get the market norm spread."
Samsung's first cross-border deal in September 2001 was issued with a wrap from MBIA Insurance Corp., enabling it to get triple-A ratings from Moody's and S&P. The bonds, which had average lives of 4.5 years, were placed privately with pricing believed to be just north of 50bp over Libor.
The issuer's second international deal closed at the end of July this year. The three-year deal was not wrapped and was priced at par with a coupon of 5.83%.
Kookmin Card will be next to step up to the plate with the first part of the $1 billion it is hoping to raise from international investors in 2002. Kookmin offered a split mandate to Bank One and ING, with ING believed to be targeting Asian buyers and Bank One marketing to North American investors.
A banker familiar with the deal said that the ING-led issue is expected to launch at the end of this week or early next.
Meanwhile, as soon as HSBC wraps up the loose ends on the Samsung Card deal, rumours suggest the bank will begin focusing its attention on a Hong Kong deal it was mandated for earlier this year as well as seeking out opportunities in Taiwan.