S&P Asgns Prlm 'AAA' to Samsung Capital Auto Loan ABS
HONG KONG--Standard & Poor's--April 22, 2002--Standard & Poor's today assigned its triple-'A' rating to Samsung Capital Auto 2002-1 approximately US$300 million guaranteed asset-backed floating-rate notes due 2008.The notes are secured by a portfolio of won-denominated auto loans originated by Samsung Capital Co. Ltd. (SCC) and guaranteed by Financial Security Assurance Inc. (FSA; AAA/Stable).
The preliminary rating is based on information as of April 22, 2002. Subsequent information may result in the assignment of a final rating that differs from the preliminary rating. The preliminary rating addresses the full and timely payment of interest and ultimate repayment of principal by the transaction's legal final maturity date in 2008.
The preliminary rating reflects:
| -- | The unconditional and irrevocable financial guarantee provided by FSA, covering the full and timely payment to note investors and to the swap counterparty on each interest payment date and principal by no later than the final legal maturity date; |
| -- | The quality of the senior bond purchased by the Cayman Islands-based special-purpose company (SPC), which is structured and assessed to meet an investment-grade standard based on the quality of the origination, the servicing procedures of SCC, credit enhancements for the bond, and the credit quality of supporting parties such as the swap counterparty and bank account providers; |
| -- | The senior bond is supported by minimum credit support of 19% of the total assets, in the form of a junior subordinated note and a letter of credit from Deutsche Bank AG (Seoul Branch) for 6% of the total assets; |
| -- | The letter of credit may be drawn to support commingling losses, to provide liquidity in the event of servicer transitions, and may also be used under certain circumstances to provide credit support; |
| -- | The structure of the bond incorporates appropriate triggers including delinquency and default ratio triggers, yield maintenance triggers; and |
| -- | Satisfactory legal and tax opinions. |
At closing, SCC will sell a revolving portfolio of won-denominated auto loans to the purchaser, Credit Creator 2002. Only the originator's interest in the loans will be transferred, and not the mortgage on the vehicle, if any exists. Credit Creator 2002 will issue an approximately US$300 million senior bond to the issuer, Samsung Capital Auto, and will swap the proceeds into won to finance the purchase of the auto loan portfolio.
Credit Creator 2002 will also issue a junior bond to finance the balance of the portfolio, which will be retained by SCC. The senior bond purchased by Samsung Capital Auto will be secured by a Korean pledge agreement and a security assignment over the assets of Credit Creator 2002 (see Legal Analysis).
Samsung Capital Auto will issue approximately US$300 million of guaranteed, floating-rate secured notes. The notes are backed by a surety bond issued by FSA, and a first, fixed, and floating charge over the assets of Samsung Capital Auto, specifically the senior bond and its interest in the security supporting the senior bonds.
This transaction is the third cross-border transaction by SCC to be rated by Standard & Poor's, following two transactions in 2001. The first, Credit Creator, was a US$187.5 million securitization of new auto loans. The second, AHa International, was a US$302.82 million securitization of SCC's AHa revolving card loan product. Both transactions were guaranteed by FSA. SCC also completed a US$234 million private transaction in 2001 backed by its AHa revolving card loan product. Thus, in 2001, SCC tapped international markets to raise a total of about US$725 million to fund its growth and expansion.
A presale report for this transaction will soon be available on RatingsDirect, Standard & Poor's premier Web-based credit analysis system, at www.ratingsdirect.com. The presale report will also be available on Standard & Poor's Web site at www.standardandpoors.com. Under Presale Reports, select Structured Finance, and then Asset-Backed Securities.
Copyright 2002, Standard & Poor's Ratings Services