The current deal removed more than ¥100 billion in NPLs from the balance sheets of banks like Asahi and Mitsubishi Trust & Banking. These were owed by about 150 corporates.
The NPLs were put in trust through a special purpose company (SPC) established by Goldman Sachs and repackaged as four classes of senior beneficiary certificates that were issued and placed privately. Goldman marketed the senior beneficiary certificates, with RCC and Mitsubishi Trust & Banking as trustees.
Credit ratings agency, Standard & Poor’s rated the certificates, due 2007, as ‘AAA’, ‘AA’, ‘A’ and ‘BBB’. The agency said the quality of mortgage assets in the property portfolio securing the certificates, and the credit support provided by the level of subordination set for each class of certificates, were the key factors behind the ratings.
The Japanese government is committed to resolving the outstanding balance of NPLs held by Japanese banks, which reached ¥30.6 trillion at end-March 2001 – although some reports have put this figure higher. Banks should remove all existing NPLs classified bankrupt and near-bankrupt from their balance sheets within two years, and any newly-emerging NPLs within three years, according to financial sector reforms introduced by the Japanese government in June last year.
The RCC is also authorised to assist in the restructuring of loans classified as ‘needing attention’.