LG Capital, a Korean credit card and financing firm, is considering issuing a cross-border asset-backed security and likely will enter a swap to convert the proceeds back into Korean won, according to an official at the firm in Seoul. LG is talking with several investment banks about the ABS issue, he said, declining to name them.
A swapper in Seoul said LG would probably issue a credit card receivable-backed issue via a special purpose vehicle and use cross currency interest rate swaps to convert the issue from a floating rate U.S. dollar-denominated liability into a fixed rate won note. Issuing a cross-border ABS would allow LG Capital to raise the profile of the firm by tapping a larger market. Interest in securitizing assets is growing, added a structurer in Hong Kong.
LG has issued several asset-backed deals in the local market but is looking at the potential of foreign markets, such as issuing a dollar-denominated security in the U.S., the company official continued. Pricing in the swap market has improved dramatically over the last year, which is one of the main reasons the issue is attractive, he added. Korea's Samsung Capital recently issued a similar cross-border ABS structure (DW, 4/8).
