Thailand: Keeping it local keeps it real
Asset-backed securities not troubled by US sub-prime problems.
"These deals are based on local assets that investors can see for themselves, which makes them quite attractive at the moment compared with cross-border transactions"
Few more worrying things could happen while you’re selling a programme securitizing government-owned assets than a military coup but this was the exact situation Kyson Ho, director of ABS and structured bonds at HSBC, faced in 2006 when book-building for a Bt24 billion ($761.8 million) ministry of finance-sponsored deal for Thailand. Of course this year something worse did happen: the sub-prime crisis and the consequent draining of liquidity in the ABS market. Despite these testing conditions the book for this year’s third and final tranche of the Thai deal was two times oversubscribed within two hours when offered on November 8. Seen in the light of several other recent transactions, this success suggests that the development of Asia’s fledgling local-currency asset-backed securities markets might continue smoothly, unhindered by the problems affecting the asset class elsewhere. "Asia’s domestic securitization markets are still young and we don’t expect them to explode with many transactions any time soon," says Ho.