Fri, Jan 14, 2005 - Page 11 News List

Growth in securitization sector expected to continue

By Amber Chung  /  STAFF REPORTER

Taiwan's fledgling securitization business is expected to continue its robust growth this year with a wider range of asset classes to be deployed, as well as a larger average transaction value per deal, an international ratings agency said yesterday.

"We expect Taiwan's securitization market to keep growing beyond NT$60 billion [US$1.88 billion] this year," said Michael Ye (葉敏), managing director of Asian Structured Finance at Moody's Asia Pacific Ltd.

The passage of the Financial Asset Securitization Law (金融資產證券化條例) in 2002 and the Real Estate Securitization Statute (不動產證券化條例) in 2003 established a framework to help provide low-cost liquidity to asset owners, as well as diversification and higher returns to investors.

The nation saw securities worth over NT$50 billion issued last year, a significant leap from more than NT$30 billion in 2003, according to Moody's.

The government previously allowed securities to be backed only by mortgages, residential properties, auto loans and credit-card debt. It has since approved 19 additional asset securitization cases.

Moody's Taiwan Corp, established in 2002, participated in the rating of seven securitization cases, including Cosmos Commercial Bank's (萬泰銀行) NT$11.6 billion in cash-card debts issued in 2003 and real-estate backed securities worth NT$4.41 billion last year for a building owned by Tong Yang Chia Hsin International Corp (嘉新國際), an affiliate of Chia Hsin Cement Corp (嘉新水泥).

The company attributed the market's prosperity to the abundant supply of suitable assets, such as the nation's consumer-finance and real-estate sectors.

"We expect to see more securitization cases in the consumer-finance field this year, with a higher transaction value per deal than last year," said Marie Lam (林慧敏), Moody's Asia Pacific's vice president and senior analyst on consumer finance.

Taishin International Bank (台新銀行), for instance, is planning to securitize the lender's credit card receivables sometime in the first half of this year, Lam said.

The financial regulator's promotion and strong regulatory support also contributed to the nation's thriving securitization market, Yeh said, citing a statement made by Lee Shyan-yuan (李賢源), a member of the Financial Supervisory Commission, at a forum prior to the press conference.

During that forum, Lee was quoted as saying that the financial regulator welcomes the issuance of securities for the nation's combined NT$100 billion in credit-card receivables across a number of issuance banks.

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