However, Moody’s warned that the growth of Korean consumer finance backed deals may slow in 2003 following a surge in defaults on consumer loans – particularly credit cards – over the last six months in Korea. The country’s regulator, the Financial Supervisory Service, introduced a raft of measures at the end of last year to rein in consumer lending, including an increase in loan loss provisions and the implementation of consumer credit review systems, which could have an impact on the number of deals launched this year.
Nonetheless, the ratings agency forecasts $6 billion in issuance in 2003, with South Korea maintaining its position as the region’s top asset-backed securities market. However, Taiwan is also expected to spring into life, following the passing of its Financial Asset Securitisation Law last June. A number of transactions, including the country’s first issue, a collateralised loan obligation from Industrial Bank of Taiwan, are currently being arranged.
Synthetic securitisation is also expected to grow in the coming year. Moody’s rated three synthetic collateralised debt obligations in 2002, and expects the number of deals to increase in 2003, due to growing investor comfort with the structure and increasing liquidity in the Asian credit default swaps market. Other structures, such as synthetic residential mortgage-backed securities could also emerge over the year, the ratings agency said.