[Exclusive] China’s First Dual-Currency ABS Is Oversubscribed

[Exclusive] China’s First Dual-Currency ABS Is Oversubscribed

Du Qingqing

Date: Wed, 06/13/2018 - 17:48 / source:Yicai
China’s First Dual-Currency ABS Is Oversubscribed
China’s First Dual-Currency ABS Is Oversubscribed

(Yicai Global) June 13 -- An asset-backed security product called Sinolink-APP Supply-Chain Asset-Backed Plan, which supports the Belt and Road initiative, has been created. It is China’s first dual-currency ABS and has different product designs and risk exposures than existing products.

Singapore-based APP China Group issues the product, with Sinolink Securities [SHA:600109] as its lead underwriter. Some 19 financial institutions will subscribe to the CNY5.5 billion (USD860 million) ABS, which has a two-year maturity and is set to be oversubscribed. Filing procedures for the product will wrap up soon, Yicai Global has learned from regulators.

"The product has attracted orders from leading state banks, joint stock banks, city commercial lenders, securities firms and fund companies. It has lured the largest number of subscribers in the history of our company,” one Sinolink Securities representative said. “We saw strong demand for ABS products among financial institutions during the roadshow. Given increasingly limited investment options within the country, financial institutions are also hoping to open up a new field.”

“We also considered issuing a dollar-denominated product. However, given the current capital environment, there are many restrictions on issuing dollar-denominated products in China. The country imposes strict limits on the use of proceeds raised. Generally, issuers are only allowed to use the money for overseas remittances or repaying bank loans. However, companies intend to use funds received under current account as their working capital. If the use of such funds is restricted, their liquidity will be affected since their demand for repayment is not that strong,” the source added.

APP China is an investment holding company with subsidiaries that are world-leading paper companies that export about 45 percent of their total output to foreign countries, with materials imported for processing purposes. Around 60 percent of their exports go to Asian countries, many along the Belt and Road route.

Editor: Ben Armour

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Keywords: MSCI, APP(China), ABS