A unit of Samsung Capital has entered into a USD200 million cross-currency swap on the back of an asset backed security it issued in the U.S. The ABS securitized won-denominated auto-installment credit, but the bond pays a dollar-denominated coupon. As a result, in the five-year swap, the special purpose vehicle issuing the securities pays a fixed Korean won rate, 7.14%, and receives a margin over U.S. dollar LIBOR.
ING Barings was the counterparty in the deal. Harry Kim, manager of the financial planning department at Samsung Capital in Seoul, said Samsung chose ING because it was the first to bring up the idea of issuing an ABS overseas and was able to provide a line of credit for the swap transaction.
ING subsequently hedged at least a portion of this swap by entering into a series of other five-year swaps. Counterparties included ABN Amro, Credit Lyonnais, Deutsche Bank, andStandard Chartered. The ABS was issued in the U.S. in order to get better pricing, said Samsung's Kim.