2001: Rock, paper, scissors, securitisation

IFR Asia - 20th Anniversary Special Issue 2017
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Steve Garton

Japan’s asset-backed market was the source of intense competition in the early 2000s, to the extent that issuers sometimes found it hard to choose between rival arrangers.

Government Housing Loan Corp, the Japanese equivalent of Fannie Mae in the US, took the contest to an extreme when it was preparing its first issue of residential mortgage-backed securities – a trophy mandate for any aspiring bank.

“We bid a ridiculously low fee to get on the deal, but we ended up level with another house,” said Raj Shourie, head of asset finance for Asia Pacific at Credit Suisse First Boston at the time.

“It went down to a Japanese game, where you have to make various shapes with your fingers, and our sales guy won it in the end.”

The game GHLC proposed was sansukumi-ken, the Japanese precursor to rock, paper, scissors, in which players compete by making a variety of different symbols including slugs, poisonous centipedes, frogs, and hunters.

CSFB’s skills proved decisive, and the firm bagged the advisory mandate ahead of GHLC’s 2001 ¥50bn RMBS debut, lead-managed by Goldman Sachs, CSFB and Sanwa Securities. It was also the first Japanese agency borrower to tap bonds without a government guarantee, an essential part of the country’s fiscal (zaito) reform.