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Developing Asian Bond Market: From Investor’s Perspective. Shanghai, November 4-6. Asset Securitisation in East Asia: Sharing Experience Ismail Dalla. Views expressed in this presentation do not represent official views of the World Bank. Financial Sector Profile Dec 2004.

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Developing Asian Bond Market: From Investor’s Perspective

Shanghai, November 4-6

Asset Securitisation in East Asia: Sharing Experience

Ismail Dalla

Views expressed in this presentation do not represent official views of the World Bank


Financial Sector Profile Dec 2004


The Size of Debt Securities in 2004


East Asian Bond MarketsOutstanding Domestic Bonds (in US$ Billion)


Role of Asset-Backed Securities Markets in the Economy

  • Development of domestic bond market

  • Development of residential mortgage market

  • Additional funding source for capital constrained financial institutions and corporations.

  • As a risk management instrument, securitization can reduce risk in the financial market

  • Potential investment opportunities for domestic and regional institutional investors.

  • Potential source for infrastructure projects.


Securitizable Assets

  • Residential mortgages

  • Commercial mortgages

  • Hire-purchase receivables

  • Small business loans

  • Credit card receivables

  • Nonperforming loans

  • Worker remittances

  • Bond portfolio

  • Collateralized mortgage-backed or loan backed obligations (CMOs or CLOs)

  • Tax liens

  • Toll road receivables

  • Trade and export receivables

  • Utility (e.g., electricity, telephone, and water receivables)

  • Oil and gas receivables

  • Service contracts

    Source: Asset-Backed Securities Market in Selected East Asian Countries, Ismail Dalla, World Bank, July 2002.


Why invest in ABS?

  • Attractive yields ( a yield pick up of 30-70 basis points over treasury)

  • High Credit Quality

  • Diversification

  • Predictable cash flows

  • Reduce Event Risks.


Cross Border East Asia Securitization Transaction by location of assets (US$ million)


Korea is the largest ABS market in East Asia (x Japan)


Malaysia-the runner up in local ABS

Source: Rating Agency Malaysia


Prospects for ABS markets (2005-2006)

Countries

  • Rapid Growth : Malaysia, China

  • Moderate growth: Hong Kong and Singapore

  • Emerging growth: Indonesia, Thailand, Philippines

    Assets: Infrastructures (Thailand, Malaysia, Singapore, Indonesia).

    Non-Performing loans: China

    Credit Cards: Thailand, China, Indonesia.

    RMBs: China, Indonesia, Thailand, Korea

    Regional: Asian MBS


Thank You

idalla@worldbank.org


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