Asset Securitization Is Likely to Become More Usual in China, S&P Says
Yicai Global
/SOURCE : Yicai
Asset Securitization Is Likely to Become More Usual in China, S&P Says

(Yicai Global) March 2 -- Asset-backed securitization will likely become a more established financing channel in China, S&P Global Ratings said in a recent report.

Credit analyst Lei Mingfeng said S&P Global Ratings expects stable asset quality and structural protection in asset securitization transactions to support the development of China's domestic asset securitization market in 2017. The continuous issuance of asset-backed securities for retail receivables, continuous improvement of non-bank issuers' participation, more flexible securitization platforms, and development of new asset classes will be the focus of this year, he wrote in the report.

China's asset securitization transactions will continue to grow in 2017. Last year, new securitization issues increased 40 percent to over CNY858 billion (USD125 billion) from the year earlier.

Though last year's growth rate was modest compared with the 50 percent jump in 2014 to 2015, China's market is still the fastest growing among the world's major asset securitization markets. The issuance of such products in other major markets was largely influenced by market volatility and regulatory uncertainty.

The potential growth in passenger car sales, more consumers purchasing cars by way of loans, and auto finance companies gradually using asset securitization as a conventional means of financing, all these factors will support the issuance of auto loan securitization products, said Lei. S&P Global Ratings also expects housing mortgage-backed securities to be the main asset class, and large banks and housing provident fund managers will be the main sponsors of such asset-backed securities. The scale of non-performing loans securitization will also continue to expand, he wrote.

The report also said asset securitization's ability to resist the economic downturn will remain the market's focus this year. In addition, improving the liquidity of the secondary market, deepening understanding about products, as well as establishing market confidence will be areas for sustainable development.

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