Final ratings assigned to Southeast Asia's first ever rated SME Loan
Securitisation
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SME ACCESS Loan extends $100 million of financing for SMEs
SINGAPORE, 6 APRIL 2006 – DBS today announced the successful completion
of the first rated loan securitisation scheme in Southeast Asia. The SME
ACCESS Loan scheme achieved a portfolio of $100 million of financing to
more than 400 SMEs, upon closing of its books on 31 December 2005.
SME ACCESS Loan was launched on 8 April last year to assist SMEs with
little collateral or limited track record, and those seeking financing
for internationalisation purposes. The scheme was initiated by SPRING
Singapore, with support from IE Singapore, and managed by DBS Bank. It
was marketed by SME CreditAssist (Singapore) Ltd, a special purpose company
set up to provide financing to SMEs through a bridging warehousing facility
granted by DBS.
DBS has fully underwritten the issuance of the rated notes which will
be fully placed out to institutional and sophisticated investors. The
unrated notes have been fully subscribed by its sponsors, SPRING and DBS.
The notes are rated AAA, AA, A and BBB by S&P and Fitch. The notes are
floating rate amortising notes, with the weighted average life of the
notes ranging from approximately 2 years to 5 years. Investors will take
on the prepayment risk in the transaction. Sixty-seven per cent of the
notes have been rated AAA, reflecting the high quality of the loan portfolio.
The AAA rating, which is also accorded to US treasuries and Singapore
Government bonds, is the highest credit rating assigned by rating agencies.
The yields for the various classes of notes are benchmarked to similarly
rated Asset Backed Securities (ABS) that trade in the market. The AAA
notes carry a lower coupon, while the BBB notes, with slightly higher
risk, carry a relatively higher coupon.
Mr Inderjit Singh, Chairman, Action Crucible for Financing, Action Community
for Entrepreneurship (ACE), who was instrumental in the launch of the
scheme, said: "In our effort to facilitate SMEs' access to financing,
we had identified loan securitisation as a possible new instrument to
help them. I am pleased that SME ACCESS Loan has indeed opened a new financing
avenue for SMEs, especially those that are currently underserved. We hope
that this pilot programme will encourage more securitisation of SME loans
in Singapore, so that more SMEs can benefit."
Mr Edwin Khoo, DBS Managing Director and Head of Enterprise Banking Group,
said: "We constantly explore and initiate innovative solutions to help
SMEs grow and are very pleased to pioneer this unique funding proposition
for our SME customers. DBS’ expertise and proven track record in structuring
products in the capital market allows us to provide new and innovative
means for SMEs to secure financing using non-traditional solutions."
He added: "We pride ourselves for the deep and close relationship that
we have built with our SME customers. Their business is our business and
together we strive to make their business successful."
Mr Loh Khum Yean, Chief Executive, SPRING Singapore, said: "SME ACCESS
Loan is part of our ongoing efforts to catalyse new options for financing
for our local enterprises. Since the launch of the scheme last year, we
have seen a number of other innovative financing tools introduced by various
financial institutions. This is good news for our SMEs."
Mr Surinder Kathpalia, Managing Director at S&P, said: "SMEs are one
of the key drivers of the Singapore economy. This innovative scheme is
a major step towards banking dis-intermediation for the SME industry by
providing access to domestic capital markets as an alternative financing
source. Standard and Poor’s believes that this development will have a
positive effect on the Singapore economy."
Ms Rachel Hardee, Head of Structured Credit, Asia Pacific, at Fitch Ratings
said, "The transaction is a collaborative effort between DBS and SPRING.
Our goal is to broaden the funding sources for SMEs in Singapore and to
serve as a pilot project for further issuances in Singapore and other
countries in the region."
Mr Azad Deen, Director of Oriental MES Logistics Private Limited, a marine
transport and logistics entity, said: "The SME Access Loan scheme comes
at an opportune time as the financing obtained enabled us to expand into
the region."
About SPRING
SPRING (Standards, Productivity and Innovation Board) Singapore’s mission
is to enhance the competitiveness of enterprises for a vibrant Singapore
economy. We work to nurture a pro-business environment that encourages
enterprise formation and growth; facilitate the growth of industries;
enhance productivity and innovation and capabilities of enterprises; and
help increase access to markets and business opportunities.
For more information, please visit www.spring.gov.sg
About DBS
Headquartered in Singapore, DBS is one of the largest financial services
groups in Asia with almost five million customers and operations in 14
markets. The largest bank in Singapore and the fifth largest banking group
in Hong Kong as measured by assets, DBS’ "AA-" and "Aa2" credit ratings
are among the highest in the Asia-Pacific region. DBS has leading positions
in consumer banking, treasury and markets, asset management, securities
brokerage, equity and debt fund raising. Beyond the anchor markets of
Singapore and Hong Kong, DBS serves corporate, institutional and retail
customers through its operations in China, India, Indonesia, Malaysia,
Thailand and The Philippines. More information about DBS Group Holdings
and DBS Bank can be obtained from our website www.dbs.com.
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