2002, at least as far as cross-border asset backed securitization (ABS) issuance from Korea goes, is shaping up to be the year of credit-card deals. Merrill Lynch will shortly embark on roadshows for a $300 issue for Samsung Capital, targeted for completion by the end of the month, while CSFB was recently mandated to arrange the debut international offering by the Korea Exchange Bank.
Now, Woori Financial û the financial holding company established last year by Hanvit, Peacebank, Kyungnam, Kwangju and Hanaro Merchant Bank û has sent out RFP's to eight investment banks, according to one banker familiar with the deal.
Barclays Capital, CSFB, Deutsche Bank and UBS Warburg are confirmed bidders, with any four from HSBC, ING, JP Morgan, Merrill Lynch, Nomura and SG likely to make up the rest of the eight-strong group.
The banker told FinanceAsia that it would be for $500 million, will be launched in the second half of the year and, interestingly enough, will be wrapped by one of the monoline insurers.
There have been rumours doing the rounds that the monolines such as Ambac, FSA and MBIA û which provided third party guarantees for the deals done by LG Card, Samsung Capital and Samsung Card last year, bringing those issues up to triple-A status û are becoming wary of being overexposed to credit-card backed transactions. There would seem to be a grain of truth to this given recent developments in the Korean card market.
Although the Korean government has played an active role in promoting the use of credit cards among consumers û the number of credit card transactions rose more than 90% in 2001 û it is concerned about the prospect of large-scale defaults.
As a result, at the start of April the Financial Supervisory Service put a block on LG Card and Samsung Card û the country's two biggest card companies û from taking on new customers for two months and KEB faces a 45-day embargo, while Kookmin Credit Card was fined W500 million ($380,000) for being overly aggressive in approving applications from unsuitable candidates.
Nonetheless, experts say that Woori's deal will be rated triple-A, implying there will definitely be monoline involvement.
Although this will be the issuer's first cross-border securitization, it has already tapped the domestic ABS market with a W340 billion ($258.4 million) offering in January. The deal, also backed by credit cards, was lead managed by Bookok Securities and Hanvit Bank.
Split into two tranches, the W140 billion one-year tranche offers a nominal fixed rate coupon of 5.56%, while the W200 billion three-year piece has a 6.82% coupon.
