Standard Chartered PLC said on November 22 that about 20 Asian asset-backed securitisation deals, worth at least $300 million each, have been delayed till next year because of the turmoil in the credit markets.
Issuers from countries such as China and South Korea have stayed away from the debt securitisation market, but would return next year when bonds yields are likely to stabilise, Warren Lee, the bank's head of asset-backed securitisation in Asia, said.
"The spread has widened by maybe 50 percent in Asia, but not as much as the US where it has widened by three to four times," he told Reuters in an interview.
"In Asia, let's say yield spreads were 25 basis points; now they are 40 basis points in that range," Lee said.
South Korea's Kookmin Bank has withdrawn plans to sell as much as $1 billion in residential mortgage-backed debt and several commercial-backed debt deals in Singapore and South Korea have been postponed, bankers have said. Lee, however, said that despite the pricing issue, markets such as Singapore and China were still flush with funds and investors were looking to invest their money.
He said that deals in local currency, which are normally small in size, may still go ahead despite the credit turmoil.
Dealogic data showed that sales of debt securities backed by assets in Asia, excluding Japan, this year have eased to $9.2 billion, from around $13 billion for the whole of last year.
Deals have sharply slowed since August when the effects of the US subprime mortgage crisis started to be felt across global markets.
Commercial mortgage-backed securities (CMBS) - which are mostly issued by real estate investment trusts to finance projects - have been especially hard hit.
Only one CMBS deal, worth $174 million, was completed this year, against seven deals in 2006 valued at $1.4 billion, Dealogic data shows.
Lee said that property trusts have stayed away from the securitisation market after sharp gains in their share prices made raising equity cheaper than issuing debt.
"The share price in Singapore has gone up a lot so if you calculate the equity yield that they pay to investors it is like 3 percent," Lee said.
In contrast, larger Singapore REITs, have average borrowing costs of over 4 percent, bankers said. But Lee said that he expects issuers to return to the market because many of these REITS would have to refinance maturing CMBS issued three-to-five years ago.
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