Asian securitisation market hits post-crisis record

The Asian securitisation market has registered its most successful year since the Asian financial crisis, with cross-border issuance totalling $2.74 billion in 2001, according to international rating agency Moody’s. This growth is set to continue, with estimates of $3 billion in cross-border deals this year.

Total issuance increased by 67% compared with the previous year, largely due to increased activity in South Korea, the rating agency said in its annual report on Asian securitisation. Overall, Korea accounted for seven of the 10 cross-border deals, or 84% of total issuance.

Korean consumer finance receivables topped the asset classes, comprising 54% of the total volumes in Asia. Most recently, Korean credit card issuer, LG Card, issued the first international securitisation of credit card receivables in December, totalling $475 million.

The renewed interest of monoline insurers in Asia’s securitisation market also played a part in the growth, Moody’s said. Monoline insurers provided financial guarantees on 65% of the total cross-border debt – all from Korea.

Looking ahead, Moody’s said it expects the market to continue its growth trend, estimating $3 billion of cross-border issuance, the bulk of which again is expected out of Korea. But the report also pointed to the synthetic collateralised debt obligation (CDO) market as a potential growth area in Singapore, due to increased bank merger activity and regulatory liberalisation. The Development Bank of Singapore (DBS) launched the first Asia ex-Japan balance sheet synthetic collateralised loan obligation (CLO) late last year, totalling S$224 million ($122 million) in tranched notes (see RiskNews November 27).

The report also points to increased activity in Malaysia and Taiwan in the coming year. Malaysia published guidelines for asset-backed securities (ABS) last April, while Taiwan is awaiting the ratification of ABS legislation, expected early this year.