Residential Mortgage Backed Securities
In December 2004, Pan Asian successfully issued its inaugural HK$1.25 billion (US$160 million) Residential Mortgage-Backed Securitization (RMBS) Program. This landmark transaction was the world’s first securitization backed by a pool of negative equity residential mortgages. Based on the firm’s experience in negative equity mortgage lending, Pan Asian has the full cycle track record on the performance of this type of red flagged asset, especially during a stressful recession period of Hong Kong in 2003.
The secured notes (both senior and subordinated classes) issued under Pan Asian’s RMBS were rated by Standard & Poor’s and Moody’s. The transaction was underwritten by Standard Bank, the largest banking group in South Africa. This notes were fully subscribed in December 2004 and there was timely repayment of principal and interest during the entire transaction. The transaction was early redeemed in August 2010 without any losses to the rated secured notes, bringing the RMBS transaction to a successful closure in less than six years.
Our success is attributable to the solid experience of Pan Asian’s principals in this niche area. Mr. Leland Sun was instrumental in pioneering the first two residential mortgage-backed securitizations completed in 1994 (Homes-1 Limited and MARS) in Hong Kong.