Singapore Sees First Quasi-RMBS Deal


Pidemco Land, a property developer with ties to the Singapore government, has launched what it claims is the city-state's first securitization backed by the sale proceeds of residential apartment units.

A special purpose corporation wholly owned by Pidemco called Silverlac Investments issued S$100 million of three-year, 4.75% fixed-rate bonds, said John Pang, head of securitization at Tokyo-Mitsubishi International (Singapore) (TMI), arranger of the transaction.

The unrated deal was sold to domestic investors, who took comfort from the fact that the bonds were fully secured by consumer-originated receivables, as well as an undertaking by Pidemco to meet cost overruns during development.

The underlying assets are progress payments, which homeowners pay in installments until construction of the building is completed. Roughly 95% of the units in the development have been sold, Pang added.

"[ABS] is new, but investors liked the innovation and the quality of the structure. They were happy about the yield and understood the cashflow and security behind the transaction," he said, adding that TMI was pursuing similar projects in Singapore.

Securitization is still very new in Singapore, where only a few property-backed transactions have been completed to date.

There are several key legal and structural requirements in a securitization that are normally incorporated to protect investors and issuers, including a bankruptcy-remote, independent SPV to issue the bonds.

That Silverlac is wholly owned by the originator indicates that Singapore's ABS market is still evolving, pointed out Christopher Chau, director of international structured finance at Fitch IBCA in Hong Kong.

"Even though this is not a full-blown securitization, it's still a first step in the development of Singapore's market. It may have also achieved the same objectives of balance sheet management and cost of financing for the originator," he added.