Asset backed securitization (ABS) professionals at nine foreign investment banks were busy last week putting the final touches to proposals due on Friday for Samsung Life's second international mortgage-backed securitization. Korea's biggest insurance company sent out RFPs last month to a list of institutions that FinanceAsia understands includes BNP Paribas, Citibank, Deutsche Bank, HSBC, ING, Lehman Brothers, Merrill Lynch, Morgan Stanley and Nomura.
According to one banker Samsung Life is looking to raise $400 million from its second MBS.
In December 2002, the company brought to market the first ever cross-border MBS with a $299.6 million deal issued out of Bichumi Global 1, a special purpose vehicle registered in the Cayman Islands. Morgan Stanley acted as lead manager on the transaction with Lehman Brothers, Nomura and Samsung Securities brought in as co-arrangers and ING as junior co-manager. The transaction was backed by 22,781 mortgage loans originated by Samsung and was rated triple-A because of a monoline wrap provided by Ambac.
One of the major talking points surrounding Samsung Life's first MBS deal concerned the pricing, which ended up being 50bp over three month Libor. That was outside the two 144A credit card deals from Korea that were issued last year - the $500 million offerings from KEB Card and Woori Card. KEB's transaction - arranged by CSFB - priced at 49bp while the UBS Warburg-led Woori deal priced at a discount to yield 49.8bp over Libor.
Prior to launch, bankers not involved in the deal felt that pricing should have been in the low to mid-40bp range given the quality of mortgage assets compared to credit cards. Nevertheless, Samsung Life's deal was launched into a less favourable market place at the tail end of last year, reflected by how secondary levels for the card deals had moved out to close to 60bp when the MBS deal was launched.
The same market conditions have largely accounted for the dearth of cross-border securitization issuance from Korea so far in 2003. Fortunately however, things now seem to be looking up. Both Samsung Card and KEB Credit Services recently announced plans for international credit card deals while news of Samsung Life's plans gives credence to the banks, rating agencies and monolines that have been bullish about opportunities in the residential mortgage sector.