Samsung Card, one of the largest credit card companies in Korea, has returned to the international markets with an ABS deal backed by credit cards receivables.
ING acted as sole arranger, structuring agent and lead manager for the $300 million transaction, while ING's Seoul-based Financial Markets division will be the main swap provider. Shinhan Bank will act as both trustee and back-up servicer.
The bonds were privately placed at 30bp over Libor to a conduit of ING and will be sold on later. This has become the norm for Korean card deals since the fallout of the consumer finance crisis two years ago. A lack of confidence in the credit card market has led banks to buy their own arranged deals wholesale through a conduit rather than try and publicly place them.
"There's a lot of skepticism about public credit card deals," says one ABS Banker. "Banks arranging the deal understand the underlying credit better than your typical European investor who typically doesn't have a lot of experience with Korean credits."
Given that all recent credit card deals have been placed privately into conduits, there are few comparables for pricing. Although not a perfect comparable, the deal has priced at a premium of around 5bp to a Calyon led Hyundai Capital Auto loan deal that is rumored to be marketing at a spread range of about 25bp.
The notes, backed by a revolving pool of credit card receivables originated by Samsung Card, feature a 26-month revolving period followed by a six-month controlled amortization period. The principle will be repaid equally over six monthly installments. The notes have a legal final maturity of 2.7 years and an average life of 2.5 years.
The deal was launched through Frontier V Ltd., a Cayman Island registered special purpose vehicle. With this deal, ING has followed the standard model for an unsecured credit card securitization.
Samsung card will sell the card receivables to an unnamed newly established Korean trust, which then issues senior certificates to Korean SPV, Challenger V Asset Securitization Specialty Company. Challenger V then issues a $300m bond to the Frontier V SPV who then swaps the proceeds into Won in order to buy an equivalent amount of receivables. In addition, the Korean trust issues a subordinated bond that is retained by Samsung Card, which is equal to a 21% credit support.
The notes carry a rating of Aa3 from Moody's and a AA- rating from Standard & Poor's.
