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.
