Moody's: Asian Structured Finance 2009 Review & 2010 Outlook

Despite challenges, cross-border issuance likely to revive as market improves in 2010


Moody's Investors Service says in a new report that issuance in the Asian structured finance market will rise moderately in 2010, as investor interest makes a comeback, and the price gap between investors and sponsors narrows.
"The performance outlook for Korean RMBS and auto loan ABS is stable.

Korean residential mortgage loans have a recovery rate of over 99%, while the performance of Korean auto loans has been stable, with no marked deterioration during the credit crisis," says Jerome Cheng, a Moody's Vice President and author of the report.

"The performance outlook for Korean credit card ABS and Singaporean CMBS is negative. The negative outlook on Korean credit card receivables is based on potential deterioration in cardholders' payment ability. Korean household debt is at an all-time high, and a rise in interest rates would
hurt cardholders' ability to pay down unsecured credit card receivables.

For commercial properties in Singapore, the oversupply of office and industrial space and a weak economy are adding pressure to both vacancy and rental rates," says Mr. Cheng.

However, Moody's sees no rating implications on the rated transactions due to asset performance. "Given the level of subordination and the structural mechanisms present, we do not expect any rating actions, even for the two asset classes on which we have a negative outlook," says Mr. Cheng.

In its outlook for activities in 2010, the rating agency says that Korea, the largest securitization market in this region, will issue some cross-border ABS, RMBS, and covered bond transactions. Investor interest is evident, given that Korean receivables did not deteriorate much during the crisis. Rather, they have all improved, as Korea's economy started to improve.

In its review of 2009, Moody's notes that the fallout from the credit crunch significantly impacted the issuance from the Asian structured finance market -- with the exceptions of the domestic markets in Korea and India.

Korea's domestic and cross-border issuance in 2009 was USD33.0 billion, 87.6% of the region's total USD37.7 billion issuance. Korea's domestic market was dominated by project finance securitizations and RMBS, while its cross-border market generated all the foreign currency-denominated issuance in the region, including Asia's first covered bond transaction.

Moody's rating actions in 2009 were mainly downgrades related to changes in counterparty ratings and the change in Korea's local currency bond ceiling. "The downgrades were not driven by pformance deterioration in the underlying receivables. If anything, the performance of these receivables is well within our expectations," explains Mr. Cheng.

Moody's also changed its assumptions for three transactions, as perceived levels of risk increased. Two of them are deferred payment transactions in Singapore where the underlying residential property buyers' default risk had increased and the property values had declined. The third one is a Real Estate Investment Trust (REIT) in Taiwan where the REIT had acquired a new property through increased leverage. The ratings of these three transactions were subsequently downgraded.

The report discusses Moody's expectations for the Asian structured inance market in 2010, examines the outlook for cross-border Korean RMBS and ABS and Singaporean CMBS, summarizes issuance activities in 2009, and discusses collateral performance and the rating downgrades in
2009.

The report, "Asian Structured Finance: 2009 Review and 2010 Outlook" can be accessed at www.moodys.com.

“THAI CONSUMER CONFIDENCE IN FOURTH QUARTER OF 2009 REACHED THE HIGHEST LEVEL SINCE 2008” SAYS NIELSEN

THAI Consumer MORE OPTIMISTIC ABOUT PERSONAL FINANCES AND JOB SECURITY IN 2010 But Spending Still Restrained


Consumer confidence in Thailand during the fourth quarter 2009 reached its highest level since mid 2008, driven by improved job prospects and better personal finances, according to the Global Consumer Confidence Survey released today by The Nielsen Company.

An increase in consumer confidence in Asian markets, as well as Brazil, continues to reflect signs that the economy is emerging from a global recession and, in some markets, the recovery is accelerating, according to the latest survey. Results of the Nielsen survey highlighted that consumer confidence gains in markets recovering fastest from recession – including Hong Kong, China, Singapore, India and Brazil – have fueled renewed willingness to spend by many consumers as they head into 2010.

While eight of the top 10 most confident markets in the fourth quarter of 2009 came from Asia Pacific, including emerging markets Indonesia (ranked 1st) and India (ranked 2nd), consumers in two of Asia’s most developed markets, South Korea and Japan, were the least confident. Brazil (ranked 3rd) and Canada (ranked 10th) were the only countries outside of Asia to make the top 10.

In Asia Pacific, Hong Kong recorded the highest consumer confidence increase for the second consecutive quarter in quarter four (Q4) – up seven index points from 93 in Q3 2009 to 100 (on a scale of 0 to 200 Index points) in Q4. Confidence in Hong Kong rose a total of 21 points since June 2009.

Globally, between June and December last year, the Nielsen Global Consumer Confidence Index rose five points from 82 to 87 while consumer confidence in Thailand increased nine points from 86 to 95.

The Nielsen survey shows that consumers in the past six months have become more optimistic about their country emerging from recession with better job prospects and personal finances. This is another sign that global recovery is heading in the right direction.

In Thailand, Nielsen found consumers became more optimistic about the economy in the fourth quarter of 2009. The percentage of Thais who said they believe the country is currently in a recession dropped for the fourth consecutive quarter– down from 91 percent in Q1 to 70 percent in Q4 of 2009.

Aaron Cross, Managing Director of The Nielsen Company, Thailand said “A year ago the world was in free-fall and consumer confidence hit an all time low in Nielsen’s global index. Thai consumer confidence also plummeted to it lowest record in Q1 2009. Since the Thai government reacted quickly to implement a significant stimulus program we have seen the consumer confidence index continue to rise throughout the year of 2009 showing an increase from 81 in Q1 to 86 in Q2 and 94 in Q3”.
Thai Consumers More Optimistic About Personal Finances

More than half (55%) of Thai consumers surveyed said their personal financial outlook for 2010 will be excellent or good compared to 45 percent last June.

Asia is also leading the way in increased discretionary spending. Chinese consumers topped global rankings (in discretionary spending) for investing in stocks and mutual funds and new technology products, and are ranked second globally for spending on new clothes and holidays. Thai consumers, however are not ready to start spending yet with 64 percent saying now is not a good time to spend - up from 60 percent in Q3.
Job Prospects Looking Up

The economy remains the top concern of Thai consumers however the concern for job security continued to decline in Q4 2009. In December 2009, 40 percent of Thai consumers described job prospects for 2010 as excellent or good compared with only 15 percent in Q1 2009, 27 percent in Q2 2009 and 38 percent in Q3 2009.
How do Thais utilize spare cash?

Thai consumers are cautious about discretionary spending. After covering necessary living expenses, Thais continue to put their spare cash into savings (59%). This has been the favorite mode of spare cash utilization for Thais since the year of 2006. After savings, holidays/vacations (47%) investing in retirement funds (30%), and home improvement and decoration (28%) were the three most popular spending options.
Discretionary spending

According to Nielsen’s survey on consumer behavior, Thai consumers will cut back on the following expenses

Spend less on new clothes (64%)Cut down on out of home entertainment (58%)Try to save on gas and electricity (55%)Delay upgrading technology, e.g. PC, mobile phone (44%)Cut down on holidays/ short breaks (42%)
About the Nielsen Global Consumer Confidence Survey

The Nielsen Global Consumer Confidence Survey was conducted between December 4 -18, 2009 and polled over 17,500 consumers in Asia Pacific, Europe, Latin America, the Middle East and North America about their confidence levels and economic outlook. The Nielsen Consumer Confidence Index is developed based on consumers’ confidence in the job market, status of their personal finances and readiness to spend. The sample has quotas based on age and sex for each country based on their Internet users, and is weighted to be representative of Internet consumers and has a maximum margin of error of ±0.6%.
About The Nielsen Company

The Nielsen Company is a global information and media company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and business publications. The privately held company is active in more than 100 countries, with headquarters in New York, USA.

OCBC Bank launches a dedicated private bank - Bank of Singapore

(“OCBC Bank”) today announced that it has completed the acquisition of Singapore-based ING Asia Private Bank Limited and its subsidiaries (together, “IAPB”) for an investment amount of approximately US$1,446 million or S$2,024 million. IAPB is now a wholly-owned private banking subsidiary of OCBC Bank and has been re-named Bank of Singapore Limited (“Bank of Singapore“). Bank of Singapore will be led by Mr Renato (“Bing”) de Guzman, the CEO of the former IAPB. The private banking businesses of IAPB and OCBC Bank will be combined and operate as Bank of Singapore. This will result in the creation of a leading Asian private bank with over 7,000 clients and total private client assets under management of approximately US$23 billion. It will also occupy a unique position as the only dedicated private bank that is headquartered in Singapore. “The successful completion of this acquisition marks a significant milestone in our private banking business. Our much larger private bank will significantly benefit customers from both IAPB and OCBC. OCBC Private Bank customers will benefit from IAPB’s fully open architecture product platform and proprietary research, while IAPB customers will benefit from the access to OCBC’s extensive branch network and products and services that were previously not available to them, such as property financing, brokerage services, insurance, retail and SME banking products and services. We are committed to investing more in this franchise and to better serve the needs of our high networth customers across our key markets.” said Mr David Conner, CEO of OCBC Bank. Mr Renato (“Bing”) de Guzman, CEO of Bank of Singapore, said, “As part of the OCBC family and with the strong backing of OCBC, we remain totally committed and dedicated to helping our clients to seek the best outcome for their financial goals, and to grow and protect their wealth. I am confident that Bank of Singapore will continue to grow and capture greater market share in existing and new markets. We will continue to focus on attracting some of the best talents in key markets and on talent development for long term growth and professional development as part of the OCBC Group.” “I warmly welcome OCBC Private Bank clients to experience the enhanced products and services that Bank of Singapore can offer and we also thank our IAPB clients for their continuing support. Over the next few months, as we align our services, our focus will be on ensuring continuity and minimal disruption to our service levels.” added Mr de Guzman. Brand Identity The Bank of Singapore brand is a reflection of its strategic home base in Singapore, which is a sound financial hub that is internationally known for its efficiency, transparency and best-in-class services. The brand also leverages on Singapore’s unique position as a rapidly growing private banking hub, attracting money flows not just from Asia but increasingly from the Middle East and Europe. Bank of Singapore offers its clients the best of both worlds – combining global know how with a distinct level of service that is among the best in the industry. It is Asia’s global private bank. The design treatment of the logo is intended to capture a strong sense of modernity. The words BANK and SINGAPORE have been rendered in bold to reflect the unique location and distinct perspective that comes from being the only dedicated Singapore-headquartered private bank. This Asian centre is complemented with the modifier “International Private Banking” which clearly positions Bank of Singapore as one that is global in its scope and scale. The red circle and stripes have been taken from the original OCBC Bank logo to reinforce the link between Bank of Singapore and OCBC Bank. The stripes have been duplicated to create two different parts, signifying the coming together of OCBC Bank’s private bank business and IAPB to become one dedicated entity to serve the needs of high networth individuals in Asia and globally. The circular nature of the icon has significance in Asia because it represents the enduring relationship Bank of Singapore has with its customers. To build brand awareness and reach out to its customers, Bank of Singapore will be launching a pan-Asia brand advertising campaign. The new integrated media campaign debuts today in global broadcast media, international as well as local print and online media reaching out to its customers around the world.