Two deals round out the ABS year

To mark the end of a solid year for Asian ABS issuance, a pair of Euro-denominated deals came to market just before the years window closed for the holidays. Hyundai Capital and Hsinchu International Bank priced Eu330 and Eu255 million dollar deals respectively on Tuesday (December 20).

Hyundai Capital launched Korea’s first unwrappd cross-border auto loan asset backed securitization ever to receive triple-A ratings with its Eu330 million deal from sole lead manager ING.

That deal, launched via Hyundai Capital Auto Funding IV Limited, has a final maturity of around 5.3-years and an average life of 3-years. Pricing was finalized at 15bp over Euribor.

The structure has a 24-month revolving period during with interest paid each month followed by a 28-month amortization period during which a specified amount of principal is scheduled to be paid each month.

Hyundai Capital enjoys a higher rating than its Hyundai Motor because of the strong support it bears from GE Consumer Finance, the world's largest non-bank and the financial arm of the General Electric group. Last-year GE Consumer purchased a 38% stake in Hyundai Capital and now plays a core role in the management of Hyundai Capital. The financial expertise of GE centres on risk management and will go a long way in guaranteeing Hyundai Capital's profit recovery and sustainable growth.

Hyundai Capital is the leading auto financer in Korea, accounting for 65% of the market offering products such as installment financing for automobile, mortgage, durables and personal loan, and new business financing. However, Installment financing makes up the lion's share of Hyundai Capital's total sales, estimated at 80%.

Hyundai Capital finances about 60% of the domestic automobile sales by Hyundai and Kia Motors.

The Hsinchu deal is the inaugural deal to be launched from the Taiwanese lender.

The triple A rated notes are launched via special purpose vehicle, Hsinchu International Mortgage Loan 1 Limited and are guaranteed by Ambac Assurance Corp.

The deal marks a number of first for the Taiwanese ABS market. It is the first cross-border RMBS issued out of Taiwan; the first monoline wrapped Taiwanese issue, Taiwan’s first Euro-denominated securitization and Taiwan’s largest ever MBS.

The deal priced at 17bp over Euribor, very tight for a inaugural issue from a debutante country. The deal was said to be heavily oversubscribed from a wide range of Asian and European accounts.

Calyon will provide the swap counterparty.

Hsinchu is a Taiwanese commercial bank that enjoys 15% market share in the Taoyuan, Hsinchu and Miaoli regions in Taiwan, the fastest growing regions in the country.