Samsung Life puts MBS plans on hold

Korean life insurer delays mandate decision for second international securitization.

FinanceAsia has learned that Samsung Life has decided to put plans for its second cross-border mortgage backed securitization (MBS) on hold. Korea's biggest life insurance company last month short listed Citibank, Deutsche Bank, Lehman Brothers and Merrill Lynch from an original field of nine.

An announcement as to who would be awarded the mandate for a $400 million deal was expected soon after, but it is believed that Samsung has now told the four banks that it will wait until July or August to decide whether to go ahead with the deal. According to one banker, the original shortlist remains valid.

News of the delay has led to some speculation that Samsung will shelve its plans completely. Much of this speculation centres on whether the company really needs the money or whether there are sufficient reinvestment opportunities available at this time. However, others suggest that the company would not have gone through the time and effort sending out RFPs and short listing four banks if it wasn't serious about doing the deal.

Whatever the outcome, if rumours about how competitive the initial bidding process was are to be believed, Samsung Life would likely be able to complete another cross-border deal on very attractive terms (see related article).

Samsung Life brought to market in December 2002 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 two of the 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.