Moody's gives upbeat take on issuance record in '97

Moody's gives upbeat take on issuance record in '97

LONDON (Dow Jones): In a report published yesterday, Moody's
Investors Service highlights the resilience and strength of Asian
structured finance markets in the face of recent months' market
turmoil and a generally cautious approach to the whole idea of
securitization.

Not only did 1997 produce record issuance, but as analysts
point out, Asian acceptance of securitization as a financing tool
is becoming more broad-based, and Asian originators of asset-
backed securities and mortgage-backed securities deals have
discovered the classic benefits of securitization.

This is not to suggest that everything went smoothly. For
example, only half the planned number of issues were launched in
1997 -- 14 in all -- but this was still twice the number of Asian
securitization deals rated by Moody's in all previous years put
together.

The countries from which they were issued, together with the
assets securitized, were Hong Kong (residential mortgages), by
far the most developed market; Taiwan (enhanced convertible
bonds); Indonesia (motorcycle and light commercial vehicle
loans); Thailand (auto leases and loans), plus a securitization
of shipping receivables from an offshore entity of a firm in
China.

Moody's report includes an analysis of developments and
prospects for future development in each of the above countries.
Outlook Moody's senior analyst, Ann Rutledge, based in Hong Kong
and author of the report, expects 1998 securitization volumes to
increase, especially from Asian corporates and from portfolios of
distressed bank assets.

'For much of 1998, growth is likely to be moderate, rather
than explosive, due to four major factors that still prevent
rapid market development,' she said.

The four factors are:

* Legal and regulatory uncertainties and a lack of
securitization infrastructure in several countries with weaker
jurisprudential traditions and greater scope for administrative
discretion in interpreting or modifying procedures and laws.

* Continuing cross border macroeconomic instabilities leading
to unfavorable swap market conditions that hinder market
development;

* An Asian attitude to investment that has traditionally been
more equity and yield-oriented, based on relationships or
corporate brand recognition rather than in-depth risk-return
analysis;

* Market sentiment among bond investors in the mature market,
who may be as overly cautious after the Asian meltdown as they
were excessively bullish prior to it.

Moody's believes Hong Kong will be the major engine for market
growth in 1998, but other possible centers of activity are
Thailand, Korea and China. Indonesia may require a return to
stability after financial and political turmoil.