Regional ABS sales may reach $2b next year
JAKARTA (JP): The transaction value of asset backed securities (ABS) in the Asia Pacific region may reach between US$1 to US$2 billion in 1998 given an increase in companies using the new debt instruments for financing, an expert has predicted.
"The low transaction value is still relatively low but we will expect it to grow in the coming years," Paul E. Jablansky, director of Salomon Brothers Inc, a unit of Salomon Inc told The Jakarta Post yesterday.
Asset backed securities are bonds or debt securities collateralized by the cash flow from a pool of assets. In this case assets include auto loans, credit card receivables, vehicles and equipment leases, consumer loans and other obligations.
Jablansky said there were only a few such transactions in the Asia Pacific region.
Thailand has three with a total value of $393 million, with one in the Philippines with a value of $50 million and four in Indonesia with a value of $310 million.
"But we expect to see increasing transaction value of ABS next year," he said at an APEC Business Advisory Council's (ABAC) presentation here yesterday.
Salomon Brothers said that Indonesia's largest automaker Astra International issued asset-backed securities worth $200 million in August 1996. PT ABS Finance, PT Bunas Financa and Bank Bira has also issued asset-backed securities worth $40 million, US$30 million and $20 million, respectively.
He said commercial and consumers lenders and infrastructure developers in the Asia Pacific region may issue asset-backed securities in the future.
He said consumer lending would be dominated by the car and credit card sectors.
"The construction of pipelines, power plants, toll roads and airports all generate attractive receivables which can be securitized to finance projects on a limited or non-recourse basis once project completed has occurred,"according to his report.
He predicted the Asia Pacific region would become an active market for asset-backed securities.
Jablansky said increasing numbers of large and small companies were working on issuing asset backed-securities at the moment.
He said the success of the ABS market in the Asia Pacific region would be greatly determined by the clarity of government regulation.
Meanwhile the Chairman of the Capital Market Supervisory Agency (Bapepam) I Putu Gede said yesterday the ABAC's presentation provided essential advice to the Indonesia's capital market authorities, which are now drafting a set of regulations to support new debt instruments on the domestic market.
Putu said the agency was set to launch six trading rules to regulate asset backed securities in Indonesia's capital markets.
Regulations will cover the taxation, legal, and accounting details in addition to the quality of assets being securitized and people involved, he said.
"Just wait, we will tell you (the press) about those six trading rules," he said on yesterday.
Representatives of ABAC, were here yesterday as part of a regional tour promote the asset-backed securities in Thailand, Indonesia, the Philippines and South Korea.
ABAC, serving as advisors to the Asia Pacific Economic Cooperation (APEC), has made the tour to tutor finance ministers, bankers, businessmen in the Asia Pacific region on the mechanism of asset-backed securitization. (aly)