Sir,
Thank you for your report (written by Rob Davies) on Danaharta's plans to securitize part of its asset portfolio, as featured in the News & Commentary section of FinanceAsia.com on 23 April 2001.
We would like to clarify one part of the report. The first sentence of the last paragraph stated that "Danaharta confirmed that it is looking at securitizing part of its non-performing loans portfolio late this year..." This statement is incorrect.
At the recent Malaysian Debt Conference (11 April 2001), Danaharta's managing director, Dato' Azman Yahya, mentioned in his speech that "Danaharta is taking concrete steps to securitize and dispose some of its rehabilitated and performing loans later this year." This is "because Danaharta believes that asset-backed securitization will not only result in better recovery, but also assist in the widening and deepening of the ringgit bond market."
He went on to clarify that as at 31 December 2000, Danaharta had within its portfolio approximately RM5.45 billion of rehabilitated (and now performing) loans; of which approximately RM3.71 billion had been performing for more than 12 months (thereby indicating the robustness of their restructured cash flows). This (RM3.71 billion) would form the feedstock for the securitization venture as the loans could be offered in tranches.
At present, Danaharta has requested and received proposals from a number of financial institutions - to help formulate the securitization mechanism and structure. There is still a bit of work left to be done, for instance on structure and documentation.
Although we are committed to pursuing the securitization strategy, we would only be able to announce the details to the public when the whole arrangement has been finalized.
We hope this explanation clarifies that Danaharta's asset securitization plans will only involve rehabilitated and performing loans.
Regards,
Izhar Hifnei Ismail, Communications Unit, Danaharta
