Regional ABS sales may reach $2b next year
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)