Washington, D.C., September 27, 2001—The
International Finance Corporation, Credit Lyonnais, Asia and Overseas Union
Bank, Singapore have launched Emerging Asia CBO, Ltd., an innovative Collateralized
Bond Obligation (CBO) transaction which will help develop regional bond
markets in Asia and promote the use of asset securitization as a
source of mobilizing funds in the region. CBO transactions involve
the pooling of a diversified portfolio of bonds into a special purpose
vehicle and funding this portfolio by issuing several tranches of securities
with different features which appeal to a wide range of investors.
The US$80 million CBO transaction consists of a securitization of a portfolio
of bonds issued primarily by companies in various Asian countries. The
securitization involved the issuance of five classes of asset-backed notes.
The four senior notes and mezzanine notes are rated AAA/Aaa, AA-/Aa3,
BBB-/Baa3, and BB-/Ba3 respectively by Moody’s Investor Service and Fitch
IBCA. The subordinated notes are not rated. IFC invested in
the senior mezzanine, junior mezzanine, and subordinated tranches of notes
for a total amount of $17.5 million.
Credit Lyonnais acted as the arranger and underwrote the offering of the
senior classes of notes which were placed with international institutional
investors. OUB Assets Management, Ltd., a fully owned subsidiary
of Overseas Union Bank of Singapore, is the transaction’s investment manager.
“This CBO represents a ground-breaking step in IFC’s efforts to develop
Asia’s bond markets,” said Javed Hamid, Director of IFC’s East Asia
and Pacific Department. He added, “IFC is very appreciative of the
commitment that our partners—Overseas Union Bank and Credit Lyonnais—have
shown in concluding this deal in the face of very challenging circumstances.”
IFC’s mission is to promote sustainable private sector investment in developing
countries, helping to reduce poverty and improve people’s lives. IFC
finances private sector investments in the developing world, mobilizes
capital in the international financial markets, and provides technical
assistance and advice to governments and businesses. Since its founding
in 1956, IFC has committed more than $31 billion of its own funds and arranged
$20 billion in syndications for 2,636 companies in 140 developing countries.
IFC’s committed portfolio at the end of FY01 was $14.3 billion.