HSBC closes $380 million synthetic balance sheet securitisation

HSBC has closed a HK$3 billion ($380 million) synthetic balance sheet securitisation transaction backed by its taxi and public light bus hire purchase agreements. It is the first synthetic transaction backed by such asset classes in Asia.

An official at the bank said the transaction will mature in 2009 and comprises five tranches, from super senior to the first-loss. The super-senior tranche is worth HK$2.61 billion.

As part of the transaction, HSBC is also issuing HK$120 million of Class A notes rated AA, HK$90 million of Class B notes rated A, HK$60 million of Class D notes rated BBB and HK$60 million of unrated Class D notes. The transaction was rated by Standard & Poor’s and Moody’s Investors Service.

There is also a $60 million first-loss tranche, which HSBC is retaining. The bank is also keeping and servicing the assets.

Sources familiar with the transaction said the Class A tranches were placed privately with institutional investors globally, and that one bank is the counterparty for the super-senior swap.