China to allow banks to sell $49 billion of asset-backed securities: sources

China to allow banks to sell $49 billion of asset-backed securities: sources

Fri, Sep 27 2013

BEIJING (Reuters) – China will allow selected banks to issue asset-back securities (ABS) worth 300 billion yuan ($49 billion) by the end of June next year, expanding a pilot program to support the economy, three industry sources said. The People’s Bank of China (PBOC) asked 20 banks, including big state banks, to submit their ABS issuance plans at a recent meeting which also involved securities brokerages and trust companies, the sources familiar with the development said.“The central bank said that the size (of issuance) will be around 300 billion yuan,” said a source who declined to be identified.

China Development Bank, a state-owned policy bank, had secured a 100 billion yuan quota, of which half will be used to securitize its railway loans, the sources said.

The PBOC will expand the scheme after the banks complete the issuance by the end of the first half of next year, they said.

China’s leaders have pledged to scale up a pilot project for securitization of bank loans as a way to clear space on bank balance sheets for new lending, while also satisfying investor demand for higher-yielding, fixed-income assets.

China relaunched a program to develop ABS last year after it was interrupted by the 2008-2009 financial crisis, but progress has been slow.

China Development Bank sold 10 billion yuan of asset-backed securities last September.

Another policy bank, Agricultural Development Bank of China, sold 1.27 billion yuan worth of such securities on Wednesday.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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