Better liquidity and legal enforcement certainty are needed
to support the development of the Chinese securitisation
Demand for auto asset-backed securities (ABS), consumer
loans and residential mortgage-backed (RMBS) securities is
booming in China, driven by consumer growth, infrastructure
needs and bank capital constraints. Chinese banks issued RMB200
billion ($29 billion) of RMBS in the first half of 2018.
Drivers for the securitisation market include a need for
diversification in funding costs and the advantage of
off-balance sheet financing.
But to further grow the securitisation market, a
well-established legal system is also essential.
"For new markets, a lack of case law can be an impediment,"
Aaron Lei, senior director & analytical manager, structured
finance ratings, S&P Global Ratings, told panelists at the
IMN’s Asian Structured Credit Summit in Hong Kong.
"A good understanding of how regulations interact...