Having dispensed with a regional securitization team as the Asian crisis unfolded in 1997, ING Barings' decision to re-establish last year seemed confirmation of its expectation that the market is starting to pick up again. Nevertheless, the bank is expressing cautious optimism about growth in the asset-backed sector, particularly as there has been relatively little activity to date outside of Korea.
Richard Lamb, director of ING's securitization team, says that certain regulatory changes across Asia are causing the bank to increase its focus again. "Like a lot of foreign ABS teams, we disbanded ours, but now we want to get back into this product," he says. "There have been a lot of regulatory changes to facilitate securitization in places like Korea and Thailand. Also, a lot of sovereign ratings have regained investment grade status which allows deals to be wrapped, so we're generally optimistic about market development."
Kevin Lam, a fellow director, says that growth within Asia will not be across the board, at least not in the short term. "We're looking at the market on a country-by-country basis," he says. "At the moment, the legislation is not in place everywhere. That means if we are to see transactions they will be synthetic deals but not traditional because there won't be a true sale of assets to a special purpose vehicle.
"In places like Hong Kong and Singapore, however, the main factor is to do with motivation," Lam adds. "At the moment, potential issuers aren't looking at this product because most of them enjoy access to cheap funds. But things could change in the future."
In terms of asset classes, ING says it will concentrate on sectors it has focused on in other locations. "We're going to prioritize our opportunities in our main areas of expertise: consumer finance and trade receivables," Lam confirms.
ING recently completed a deal backed by auto loans for Korea's Samsung Capital. The $200 million transaction marked a few notable features in that it was the first time a Korean originator received triple-A ratings by international agencies and, because it was bought by an asset-backed commercial paper (ABCP), it was also the first time an ABCP program has involved a Korean issuer and won-denominated receivables.
