Daewoo Securities launches CBO deal

Korea’s Daewoo Securities has re-entered the securitization market with a collateralized bond obligation (CBO) that parcels together corporate bonds issued by 52 small- and medium-sized domestic companies. The W160 billion deal ($124.8 million) is unusual in that CBO portfolios typically include bonds issued by larger firms, but Daewoo worked with the Small and Medium Industry Promotion Corporation (SMIPC) to promote this means of raising funds for smaller corporates.

The underlying asset pool - also valued at W160 billion - comprises bonds rated locally between B and BB-plus, with the exception of a bond issued by the BBB-minus rated video producer, Cimtec. These bonds, with maturities of between one and two years, yield between 11.12% and 12.6%. According to an official at Daewoo, there is no particular concentration of issuance from any one sector.