Bankers said a KRW270 billion balance sheet collateralized loan obligation closed last week for South Korean-based Hanvit Bank. The CLO will reportedly transfer the Korean won equivalent of USD200 million of leveraged Korean loans off of the banks balance sheet into a special purpose vehicle. The bank reportedly issued KRW 270 billion in notes to the Korean market to raise funding for the sale. Note tranches and spreads could not be determined by press time. Calls to Hanvit Bank were not returned by press time.
A banker noted that speculation has surrounded recent deals coming out of Korea and that questions regarding the amount of risk transfer in this deal was discussed in the market. Korean banks doing balance sheet CLOs have reportedly been guaranteeing performance of the loans after sale to the SPV, not completely transferring risk off their balance sheets. "Transactions have been done for optics rather than economics," he said.