INVESTORS SNAP UP SINO LAND


Despite a massive drop in local property values over the past year, Hong Kong developer Sino Land raised $302 million at favorable pricing through its global mortgage-backed issue. It is only the second mortgage-backed issue to originate from Hong Kong this year, since the launch of a $575 million MBS from Wharf Holdings Ltd. in February.

The securities are backed by cashflows from 21 residential, commercial and industrial properties located throughout Hong Kong. An SPC called Hong Kong Turbo Mortgage Funding Ltd. issued two classes of six-year securities. The top four pieces were floating-rate, U.S. dollar and euro-denominated securities, while the subordinate piece was denominated in Hong Kong dollars and priced to yield 9.8%. Moody's Investors Service and Fitch IBCA rated the Class A notes triple-A and the Class B notes double-A.

The issue was sold in Europe, Asia, and the U.S. and heavily oversubscribed in all markets, said a banker at Deutsche Bank. One strong selling point was the so-called "turbo" feature, which uses cashflow in excess of the reserve fund to pay down the bonds, resulting in faster payment of the principal and a more secure structure for investors. In addition, "the very low loan-to-value ratio, the strength of the underlying property, and the structure of the transaction were all reflected in very strong investor interest," commented the banker.