A flurry of Chinese auto asset-backed
securitisation (ABS) deals has sparked renewed enthusiasm for
structured finance in the jurisdiction.
Chinese authorities have been encouraging the
growth of a securitisation market to discourage the sale of
informally securitised products. Collateralised loan
obligations (CLOs) comprise the vast majority of the market,
but auto ABS may soon become more important.
And foreign issuers who have received a quota are
completing deals. Volkswagen’s Driver China One
Trust, sold in June, was the first to receive an international rating. Five
other auto ABSs have been announced; four of those are by
global auto manufacturers.
Market participants have praised China’s pilot
programme. Auto companies want a conduit-type structure where
they can move loans off their balance sheets to a captive
company which then securitises...