Shinsei Bank plans to securitize its own loan assets and sell them to investors to diversify its fundraising methods, bank officials said Thursday.
The bank's first such securitization program will be conducted in December to raise 100 billion yen, they said.
Under the plan, Shinsei will entrust loan assets to its trust banking arm and obtain trust beneficiary rights. The rights will be sold to a special purpose company set up by the bank that will issue securities backed by the rights for sale to investors.
Shinsei will set up trust beneficiary rights on 1.4 trillion yen worth of loans made to more than 500 corporate customers. The special purpose company will be able to issue securities any time within the 1.4 trillion yen limit, they said.
This is the first time a Japanese bank has combined loan claims with so many corporate borrowers for the purpose of securitization in Japan. The securities to be issued by Shinsei's special purpose company are expected to receive top ratings because the bank will continue to hold any questionable claims separate from the pool of loans.
This will make the interest rate Shinsei has to pay to raise funds relatively low, they added.