Samsung Life Insurance, Korea's biggest insurance company, which also has significant real estate and research and development businesses, will launch the country's first cross-border residential mortgage backed securitization (RMBS) later this year. The company requested proposals from three investment banks; CSFB, Lehman Brothers and Morgan Stanley, and is expected to announce which has won the mandate shortly.
According to a source familiar with the deal, the transaction, which will securitize mortgage loans from Samsung's own portfolio, will be for at least $500 million.
The exact size of Samsung's mortgage portfolio is difficult to ascertain because the company does not include a breakdown of different loan types in its annual reports. However, its overall loan business had grown to $13.25 billion by the end of 2000, around $9 billion of which is accounted for by individual borrowers, and it can reasonably be assumed that a good percentage of this is residential mortgages.
In any event, Asian ABS professionals will eagerly await the transaction, as it offers further evidence of increasing sophistication in the Korean cross-border market. Consumer asset classes such as auto loans have dominated issuance in the past year or so, and Samsung's deal will bring some welcome diversity.
Although legislation for the domestic MBS issuance has existed since January 1999, the market has been slow to develop and deals have almost exclusively been launched through the Korea Mortgage Corp (KoMoCo).
KoMoCo was established in September 1999 to provide long-term housing finance, and has used securitization to transfer mortgage loans from financial institutions into mortgage-backed bonds.
Samsung Life became involved in this process in January, when KoMoCo issued W18 billion of bonds backed by mortgages originated by Samsung. Rated triple-A by local credit rating agencies, the transaction was split into three tranches of one, three and six year maturities.
The one-year bonds carry a 5.65% nominal coupon, the three-year tranche 6.78% and the six year piece offers 7.5%.
