Chang JuliaChongHui (D1) : PPT

Korea Asset Management Corporation

KAMCO’s Real Estate ABS in Korean Market

Ms. Julia Chong Hui Chang General Manager, International Business Dept.

Korea Asset Management Corporation(KAMCO), Korea

2Korea Asset Management Corporation

II. KAMCO’s Role in the Financial Sector Restructuring

III. Classification of NPL

Ⅰ . Real Estate Securitization Market in Korea

IV. ABS Issues by KAMCO & Case Studies

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I. Real Estate Securitization Market in Korea


I-1. KAMCO’s Ordinary Loan Disposition Methods

I-2. Korean Real Estate Securitization Market in General (1999.1 ~ 2000.7)


I-1. Real Estate Securitization Market in Korea

(Unit : KRW in bn)

Bulk sale

ABS Issuance

Court Auction, Public Sales

Sale to AMC (JV)

Sale to CRC (JV)

Collection

Individual Loan Sales

Recourse & Cancellation

Total

Resolution MethodsAccumulated Resolution

Face Value Purchase Value Recovery Value

2,162

493

8,045

735

600

6,386

114

3,271

21,806

939

193

268

202

87

2,409

1,650

1,878

7,626

966

196

402

292

114

2,942

2,683

1,878

9,473

KAMCO’s Ordinary Loan Disposition Methods

Source : KAMCO white paper, 2001.12


I-2. Korean Real Estate Securitization Market in General

Real Estate ABS Market (1999.1 ~ 2000.7)

Restructured corporateloan

Koland assets

Residential mortgage

Ordinary secured

Lease receivable

Real estate trustreceivable

Construction receivable

※ABS Issuers :

KAMCO, Housing & Kookmin,

IBK, Agricultural Bank,

Mutual Saving Banks, etc.

6.52%3.1%

8.21%

11.7%

12.3% 21.16%37%

※

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II. KAMCO’s Role in the Financial Sector Restructuring


II-1. KAMCO’s Role

II-2. KAMCO’s Resolution Strategies


Early Recovery

of Public Money

Provide Liquidity and Restore Financial Stability Revitalize Korean Economy

Inject Public Money

Resolve NPLs

Minimize

Public Burden

Support

Normalization

Assist Restructuring

FinancialInstitutions

Investors

Government

/National Tax

Acquire NPLs

Corporate

II-1. KAMCO’s Role in the Financial Sector Restructuring


II-2. KAMCO’s Resolution Strategies

• Suspension of legal action • Suspension of foreclosure procedure• Lend working capital• Debt for equity swaps• Payment guarantees• Purchase promissory notes

Corporate Restructuring Company Asset Management Company Corporate Restructuring Vehicle

Analysisof

NPLs

• Portfolio sales(Int’l Bidding)• Securitization (ABS)• Public sales• Foreclosure sales• Individual Loan sales

• Discount outstanding principal balance

• Reduce interest rate• Extend payment maturity

Disposition Rehabilitation

ReschedulingJoint Venture

Principles & Policies

Speedy, loss minimizing and value upgrading resolution

Efficient management, transparent procedures and fair transactions

Strategies

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III. Classification of NPL


III-1. KAMCO’s Asset Types

III-2. Secured Ordinary Loans - “Property” Play


KAMCO has 4 Types of Assets

III-1. Classification of NPL

Ordinary loansSecured

ordinary loansUnsecured

ordinary loans

SecuredRestructured

corporate loans

Unsecuredrestructured

corporate loans

Restructuredcorporate loans

Secured UnsecuredCourt approval

Collateral


III-2. Classification of NPL

Ordinaryloans

Loans currently delinquent for 3 months or longer whetherthey are secured or unsecured.

Secured Ordinary Loans were securitized

Loans which have obtained court approval forrestructuring as part of corporate re-organization orcomposition proceedings whether they are secured orunsecured.

Restructuredcorporateloans

Obligor’s payment schedule is approved by Bankruptcy Court and agreed upon by creditors

Collateral value is already reflected in obligors’ payment schedule

Secured Ordinary Loans are “Property” Play

Restructured Loans are “Corporate” Play

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IV. ABS Issues by KAMCO & Case Studies


IV-1. Joint Venture SPC with Private Investor

IV-2. Structure for KAMCO ABS Issuance

IV-3. Case study 1 : KAMCO 2000-4 Discounted Cash Flow (DCF)

IV-4. Case study 2 : Resurgence Korea One (first real pass-through payment)


IV-1. Joint venture SPC with Private investor

KAMCO Investor

SPCKAMCO 50% : Investor 50%

AMCKAMCO 35% : Investor 65%

NPLs cash

Asset Management Contract

❑ Why joint venture SPC for NPL resolution ?

➙ For easier transfer of mortgage & REO, and stamp duty exemption

cash


IV-2. Structure for KAMCO ABS Issuance

SPC(Shell com.)

Obligors

(2) Securities

(4) Proceeds(5) Proceeds

(1) True Sale (1) Notice of loan transfer to SPC

(6) Payment

Lead Manager

Disposed Asset Mgt

Dept Credit Enhancer Trustee

Legal Advisor

Financial Advisor

Rating Agency

(3) Securities

(3) Proceeds

Investors

Financial Supervisory Commission (FSC)

Register to

KAMCO

http://210.95.55.199/frame.asp


IV-3. Case study 1 : KAMCO 2000-4

ISSUER:

ASSET:SIZE:

COUPON RATE:

RATING:

KAMCO 2000-4 Securitization Specialty Co.

Ordinary Secured Loans

KRW 257.0 bn(3 tranches) with 57 bn Subordinated notes

Govt Bond +20bp /+90bp

LEGAL MATURITY:

LISTING:NOTES OFFERD:

CREDIT FACILITY PROVIDER:

1 Year/2 Year

Kookmin Bank(KRW 80 bn)

Korea Stock Exchange

In KRW

AAA / AA / na

REPAYMENT PRINCIPLE: Pay Through Basis

SELLER: KAMCO

CREDIT ENHANCEMENT: 50 bn cash reserve

LEAD MANAGER:

ISSUE DATE:

Seoul Securities, SK Securities

19 July 2000

ORIGINATING BANKS: Commercial banks in Korea(Creditor banks)

MASTER SERVICER: KAMCO


IV-3. Case study 1 : Discounted Cash Flow (DCF)

Valuation Process by Discounted Cash Flow Method (DCF)

•NPL in FV(KRW 741.2 bn)

•Auction and Collection Simulation

•Estimated Cash Inflow(KRW 282.5

bn)

•Discounted

•Yield on Corporate Bond

•Spread

of 1%

•Valuation(KRW 254.9

bn)

➢ Cash Flow estimated by applying Court Auction statistics by property type and location➢ Derived Investment Value: KRW 254.9 bn

※Appraisal value analysis

Number of Obligors: 1,483

Number of Collaterals: 1,744

46.7% value were from 258 factories

Only 11.3% were from residentials


IV-4. Case study 2 : Resurgence Korea One

ISSUER:

ASSET:SIZE:

COUPON RATE:

RATING:

Resurgence Korea One Securitization Specialty Co.

Real Estate & Mortgages purchased from KAMCO

KRW 174.9 bn(3 tranches) with 64 bn Subordinated notes

5.51% / 6.51% / 7.52%

EXPECTED FINAL MATURITY:

LISTING:NOTES OFFERD:

CREDIT FACILITY PROVIDER:

Feb 2002 / May 2002 / May 2002 (legal maturity:Nov. 2005)

Korea Development Bank (KRW 17.5 bn)

Korea Stock Exchange

In KRW

AAA / AA / A

REPAYMENT PRINCIPLE: On a Pass Through Basis

SELLER: Morgan Stanley’s Conduit

CREDIT ENHANCEMENT: Servicer Advance by Morgan Stanley

LEAD MANAGER:

ISSUE DATE:

Morgan Stanley Dean Witter, Seoul Branch

19 Oct. 2001

ORIGINATING BANKS: Commercial Banks in Korea

MASTER SERVICER: Morgan Stanley


IV-4. Case study 2 : Resurgence Korea-One ABS Issue Structure (2-Tier ABS)

MSDWTornado Inc.

MSDWXian Inc.

KAMCO ISSUER INVESTOR

Asset transferred

Asset transferred

Subordinated ABS

Subordinated ABS

Senior ABS

Asset transferred

Asset transferred

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Http : www.kamco.or.kr

Asem Tower, World Trade Center, 159-1 Samsung-dong, Kangnam-ku, Seoul, Korea

Phone: 82-2 2103-6131Fax: 82-2 2103-6149e-mail: [email protected]

All r ights reserved, Korea Asset Management Corporation

Chang JuliaChongHui (D1) : PPT

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