South Korean insurer Samsung Life is preparing to issue Korea’s first cross-border residential mortgage-backed securitisation (RMBS) to be launched in the third quarter of the year, and as part of the transaction, it has shortlisted three potential interest rate and currency swaps counterparties, who will make their presentations in the next two weeks.The insurer has mandated Morgan Stanley as the lead manager, and Lehman Brothers and Samsung Securities as co-managers to structure US$500 million of securities backed by Korean won-denominated mortgages.
The transaction will have an expected life of between one and five years and will include a payment guarantee provided by a monoline insurer, Samsung said. The monoline wrap will help Samsung enhance its RMBS credit rating.
A number of Korean credit card companies and consumer lenders have sold cross-border transactions in the past 18 months to diversify their funding sources away from the local market. Most of those deals were wrapped by a monoline insurer to achieve triple-A, or at least high-grade, ratings.
Foreign exchange risks between the Korean won assets and the US dollar liabilities will be offset through currency and interest rate swaps, in which one counterparty agrees to receive the Korean won revenues from the assets and to pay out US dollars to noteholders.
Samsung Life told RiskNews that “the swap partner is yet to be decided. The decision will be made after reviewing the presentations by three potential partners in July”.
More on Foreign Exchange
Sponsored feature: Commerzbank
Limiting response time for market-makers may become outdated method
Pricing difficulties since SNB currency floor removal cause friction
Bank of Thailand announces measures
Sign up for Risk.net email alerts
Sponsored video: MarketAxess
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.