MOODY'S RATES TAIWAN'S COSMOS BANK'S CASH CARD SECURITIZATION DEAL Aa3
US$230 Million of Asset-Backed Securities Rated.
Hong Kong, December 19, 2003 -- Moody's Investors Service has assigned a Aa3 rating to the secured floating
rate notes (the notes) issued by G & M Finance Limited. The
transaction is the first cross-border asset-backed securitization
transaction arranged under Taiwan's Financial Asset Securitization Law
passed in June 2002. It is also the first securitization transaction
for Cosmos Bank, Taiwan. UBS Limited and HVB Singapore Limited
brought the deal to the market. The complete rating action is as
Issuer: G & M Finance Limited
US$230,000,000 Secured Floating Rate Notes due 2010,
The Aa3 rating on the notes addresses the timely payments of interest
and the ultimate repayment of principal at par by the note maturity date
in January 2010.
In assigning the Aa3 rating, Moody's mainly considered the following
1. the credit quality of the underlying George & Mary cash
card receivables (GM cash card receivables);
2. the 23% subordination provided by the subordinated seller
3. the fully-funded reserve to cover (a) 3 months of senior
fees and expenses, and yield on the investor interest, (b)
costs related to sending out servicer termination notices, and (c)
transference expenses incurred in the event that the servicer's role has
to be transferred to the back-up servicer;
4. the NTD/USD currency and interest rate swap provided by UBS
AG - acting through its Taipei branch - as the swap counterparty
(UBS Taipei branch);
5. the transaction's structural features, including the various
triggers that are involved in servicer termination events and accelerated
6. the approval obtained from the Bureau of Monetary Affairs department
of the Taiwan Ministry of Finance on the issuance of trust certificates
by the receivables trust;
7. the perfection of the transfer of existing and future GM cash
card receivables against all parties, including the relevant obligors,
by publication prior to the transfer date;
8. the experience of Cosmos Bank, Taiwan (Cosmos) as the
originator and the servicer; and
9. the involvement of Deutsche Bank AG, Taipei branch (DB
Taipei branch) as both the receivables trustee and back-up servicer.
G & M Finance Limited (the issuer), uses the proceeds of the
notes to subscribe for the investor certificate issued by the Cosmos Bank
George & Mary Cash Card 2003 Securitisation Special Purpose Trust
(the receivables trust), which has been established under Taiwanese
The receivables trust issues the investor certificate, the subordinated
seller certificate, the seller certificate and the ESR certificates.
Cosmos subscribes for the subordinated seller certificate and the seller
certificate. The ESR certificates are placed in Taiwan.
Cosmos transfers a pool of GM cash card receivables to the receivables
trust. Collections from these receivables are used to fulfill various
payment obligations. A seller interest of 10% is present
to absorb fluctuations in the receivables balance.
The structure features a 6-month revolving period and a 5.5-year
amortization period. The notes pay monthly interest at the rate
of one-month LIBOR plus a spread. The principal will be
repaid on a pass-through basis during the amortization period.
Upon hitting the accelerated amortization triggers, the revolving
or amortization periods will end immediately. The investor percentage
- used to determine the portion of collections which the investor
interest will receive - will be fixed at that time, causing
more principal collections to be passed through to the investor interest
than during the amortization period.
A swap provided by UBS Taipei branch is in place to mitigate the currency
and interest rate mismatches.
In rating the transaction, Moody's considered, among other
factors, the historical performance of the GM cash card receivables,
and the structural protections built into the transaction.
From its analysis, Moody's believes that the 23% subordination
provided by the subordinated seller interest offers sufficient protection
to noteholders against potential defaults in the underlying GM cash card
receivables and that it is consistent with the Aa3 rating.
A more detailed analysis of the transaction will soon be available at
Moody's website: http://www.moodys.com
The issuer is a newly established bankruptcy-remote, special
purpose company incorporated in the Cayman Islands. Cosmos is the
originator and servicer of the GM cash card receivables. Cosmos
introduced the George & Mary cash card in Taiwan in July 1999 and
currently has the largest domestic market share, about 55%
in terms of the total outstanding balance, of the cash card business
in Taiwan. DB Taipei branch is the receivables trustee and the
The securities are not registered under the Securities Act of 1933 (the
Act) under circumstances reasonably designed to preclude a distribution
thereof in violation of the Act. The issuance is designed to permit
resale under Rule 144A.
Moody's Investors Service is a publisher of rating opinions and research.
It is not involved in the offering or sale of any securities, nor
is it acting on behalf of the offering party. This release is not
a solicitation or a recommendation to buy, hold or sell securities.
Michael M. Ye
Structured Finance Group
Moody's Asia Pacific Ltd.
Asst Vice President - Analyst
Structured Finance Group
Moody's Asia Pacific Ltd.