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Amid the twists and turns of pandemic-ravaged 2020, China’s asset-backed securities (ABS) market managed to continue its growth trajectory following a U-shaped recovery.

The market has shown no signs of losing momentum in the first half of this year, with offerings totalling RMB1.3 trillion (USD202 billion), up 45% from the same period last year. Specifically, credit ABS more than doubled in the past year – with 105% year-on-year growth thanks to a low base because of slower issuances during the pandemic in 2020 – making up 31% of total ABS issuances this year.

ABS backed by corporate debt increased by 20% compared with the same period last year, accounting for 50% of the total, while asset-backed medium-term notes (ABNs) jumped by 53% from the first half of 2020, contributing to 19% of total issuances.

The issuance of standardised ABS products amounted to nearly RMB2.9 trillion last year, representing a 23% year-on-year increase. The market inventory by the end of 2020 reached about RMB5.2 trillion, translating into growth of 24% compared with the previous year, according to the 2020 Asset Securitisation Development Report published by China Central Depository & Clearing (CCDC).

Since the launch of the Administrative Measures for the Pilot Securitisation of Credit Assets in 2005, China’s ABS market has taken a hard road to becoming the world’s second-largest.

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Genuineness of assets in securitisation remains key concern

China has seen a constant stream of innovation in asset securitisation products ever since the 2014 publication of the Regulations for the Administration of the Asset Securitisation Business of Subsidiaries of Securities Companies and Fund Management Companies. Whichever structure is used, however, the primary focus must remain the genuineness of the underlying assets. … (Read more >)

Fang Yan, DeHeng Law Offices

Fang Yan
Partner
DeHeng Law Offices

C-REIT pilot projects and development prospects

The first nine pilot projects for publicly offered infrastructure funds were listed on the Shanghai and Shenzhen stock exchanges on 21 June 2021, marking the official birth of China Real Estate Investment Trusts (C-REITs). … (Read more >)

Fang Rong, Han Kun Law Offices

Fang Rong
Partner
Han Kun Law Offices

Based on the core policy “that housing is for residing, not for speculating”, real estate financing has become increasingly tighter. Given such advantages as long terms, relatively low financing costs, low repayments during the period, flexibility in the use of proceeds, etc., commercial mortgage-backed securities (CMBS) are increasingly drawing market attention. … (Read more >)

Chen Xiuli, V&T Law Firm

Chen Xiuli
Partner
V&T Law Firm

Seizing new opportunities in national strategies: Carbon neutral ABN

At the 75th session of the UN General Assembly in September 2020, President Xi Jinping pledged that China would “adopt more vigorous policies and measures” to ensure the nation’s carbon dioxide emissions peaked no later than 2030, and that it achieved carbon neutrality three decades after that. This was the first time that China had set a timetable for both targets. … (Read more >)

Commerce-&-Finance-Law-Office
Luan Jianhai, Commerce & Finance Law Offices

Luan Jianhai
Partner
Commerce & Finance Law Offices

Urban rail transit has long been encouraged and supported by national policy, having been specifically mentioned in the 10th, 13th and 14th five-year plans due to its being a form of large-capacity clean transport and one of the most important elements of citywide infrastructure in boosting investment, adjusting structure and stabilising growth of the national economy.(Read more >)

Jincheng Tongda & Neal

YE FEI
Senior Partner
Jincheng Tongda & Neal

Xie Yuhao, Jincheng Tongda & Neal

XIE YUHAO
Senior Partner
Jincheng Tongda & Neal

China ABS Outlook

China restarted its asset-backed securitisation (ABS) business back in 2012, but in recent years, the rapid emergence of novel financial products – such as securitisation of data assets, green assets and intellectual property (IP) assets – is streaming into parallel with China’s development agenda and aiming to solve financing problems in these particular fields. All this brings fresh new opportunities and challenges to the market, says Wang Lihong, Beijing-based senior partner of Dentons’ Banking and Finance Practice Group.

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