Thailand readies record securitisation

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Thailand is preparing to launch the largest securitisation out of Asia, excluding Japan and Australia, with the sale of more than $1bn in bonds backed by residential mortgages.

Khan Prachuabmoh, the president of Thailand’s Government Housing Bank (GHB), confirmed that the state-owned institution planned to raise at least Bt40bn ($1.06bn) in a deal that is likely to come to market in the first or second quarter of next year.

The deal, if sold in one shot as planned, would beat that of China Network Communication Group, which sold a $1.01bn commercial mortgage backed deal at the start of April this year, according to data from Thomson Financial.

The US is the largest market for securitisation and issuance there topped $1,000bn in a single year for the first time in 2005. Europe, led mainly by the UK, has annual issuance of more than €300bn and the instruments have taken off in Japan and Australia.

But a market has been slower to emerge in other Asian states. South Korea has had the strongest issuance and holds seven of the top-10 slots in Thomson’s list of the biggest Asian deals. Thailand has had mostly very small deals backed by consumer loans so far.

Mr Khan said GHB planned to issue its request for proposals from banks to lead the sale of the bonds in September, after the deal gets approved by the board, which is expected in August.

GHB hopes to have an arranger by the end of the year. Already, 14 banks, including Standard Chartered, have expressed interested in participating.

“We will choose whoever gives the best deal,” Mr Khan said.

GHB plans to execute the sale in a single tranche, with about $750m raised from international investors and $250m raised from domestic investors, Mr Khan said.

GHB, Thailand’s largest mortgage provider and a deposit-taking institution, would use the funds to help fulfil its target of extending Bt100bn in new housing loans in 2007.

GHB is Thailand’s largest provider of home loans, with about 40 per cent of the mortgage market. It traditionally focused on providing loans to low and middle-income borrowers, who had less access to commercial bank lending.

However, it has expanded its business among more affluent borrowers since late 2003.

The GHB is extending about Bt100bn of new loans this year.

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