Bangkok--Jan 10--Moody's
Moody's Investors Service says in its annual review and outlook on securitization in Asia that it expects Korea, Singapore, and Taiwan to continue dominating the market in 2006.
In addition, after the successful completion of two pilot securitization
transactions in 2005, China is ready to explore various asset classes and generate more activities in the years to come.
China's two pilot securitization transactions were China Construction
Bank's RMBS and China Development Bank's CLO. "These two pilot deals only utilized less than half of the RMB15 billion 'quota' that the People's Bank of China had granted to both banks," says Michael Ye, Managing Director for the Moody's structured finance group in Hong Kong.
"Hence, we expect to see more domestic deals with these two asset classes in 2006. In fact, it is our understanding that China Development Bank is
already considering a second securitization issuance with a longer tenure," Ye adds.
Moody's also expects to see cross-border CMBS deals from China. "The listing of GZI Real Estate Investment Trust on the Hong Kong Stock Exchange in December 2005 points to a strategy of funding source diversification for Chinese real estate assets," explains Li Ma, a Moody's Vice President and Senior Analyst.
"We expect to see more Chinese REITs listed and they may use CMBS as a
funding source," he says, adding that, at the same time, the potential for CMBS will face stiff competition from other funding alternatives as Asia has a very liquid capital market.
The report says that for the more established Korean cross-border securitization market, ABS and RMBS transactions will emerge in 2006, though they will remain in the hands of the few repeat originators seen in 2005.
"This has been the situation in Korea for the last two years where both
the originator universe and asset types are very limited," adds Marie Lam, a Moody's Vice President and Senior Analyst. This concentration, however, may be reduced by activities in the commercial property market after many years of study and exploration.
As for Singapore and Taiwan, Jerome Cheng, a Moody's Vice President and
Senior Credit Officer, says that these two markets will extend the trends seen during 2005 into 2006. Singapore will be dominated by property-related activities and Taiwan by REITs.
Cheng comments that various Taiwanese REITs are awaiting regulatory approvals and other real estate owners are showing interest in liquidating part of their real estate portfolios through REITs.
Meanwhile, liquidity in the Hong Kong capital market dampened the securitization market in 2005 when only two transactions emerged.
Moody's expects Hong Kong will continue to lay low as private-sector interest remains lacking.
A copy of the Moody's report entitled "2005 Review and 2006 Outlook,
Asian Structured Finance: Market Needs Further Diversity, and Opportunities Open in China" is now available on the Moody's website: http://www.moodys.com. It looks at Asia, excluding Japan and Australia.
Hong Kong
Min Ye
Managing Director
Structured Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 2916-1121
Hong Kong
Marie Lam
Vice President - Senior Analyst
Structured Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 2916-1121 End.