LINE

Text:AAAPrint
Economy

Non-financial issuers to lead expansion of securitization market

1
2016-04-11 16:28chinadaily.com.cn Editor: Feng Shuang

China's securitization market will continue to expand in 2016, with non-financial institution issuers taking the lead, Fitch Ratings executives told chinadaily.com.cn.

Tracy Wan, senior director of Fitch Ratings' Structured Finance, said the slowdown of China's economy could have an impact on corporate borrowing. Less demand for loans might dampen financial institutions' interest in packaging their quality loans to securities and selling to the market. However, non-financial institution issuers don't have that problem.

China's securitization market closed 2015 with a record 593 billion yuan ($90 billion) of issuance, according to China Central Depository & Clearing Co Ltd. Financial institutions sold 406 billion yuan of securities, up 44 percent from a year ago; non-financial issuers sold 180 billion yuan of securities, a five-fold increase over a year earlier.

China has two separate securitization regimes at present: the Credit Asset Securitization (CAS) and Asset-Backed Specific Plan (ABSP) scheme. The CAS is used specifically for financial institutions and uses the special purpose trust structure under the Trust Law. The CAS regime is regulated by the China Banking Regulatory Commission and the People's Bank of China.

The ABSP, governed by the China Securities Regulatory Commission, is used by all non-financial institution issuers and therefore dominated by corporate issuance and are listed either on the Shanghai or Shenzhen Exchange.

"Unlike banks, who mainly rely on deposits as cheap funding source, corporations have to lend from banks, so they have more incentives to seek alternative sources, such as securitization," Wan said.

She said a crucial task for China to develop the market is to educate investors to let them know more about the products. Now when investors are looking for ABS, they are primarily focusing on the "name" of the issuers: big-name issuers' products are more popular, instead of looking at individual products' structure.

"Hopefully the increasing example of defaults in bond market would alert them on individual risk," Wan said.

  

Related news

MorePhoto

Most popular in 24h

MoreTop news

MoreVideo

News
Politics
Business
Society
Culture
Military
Sci-tech
Entertainment
Sports
Odd
Features
Biz
Economy
Travel
Travel News
Travel Types
Events
Food
Hotel
Bar & Club
Architecture
Gallery
Photo
CNS Photo
Video
Video
Learning Chinese
Learn About China
Social Chinese
Business Chinese
Buzz Words
Bilingual
Resources
ECNS Wire
Special Coverage
Infographics
Voices
LINE
Back to top Links | About Us | Jobs | Contact Us | Privacy Policy
Copyright ©1999-2018 Chinanews.com. All rights reserved.
Reproduction in whole or in part without permission is prohibited.