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Press Release: S&PGR Says China Securitization New Issuance Hit Record In '16

5 Mar 2017 10:29 pm
 
 
The following is a press release from Standard & Poor's: 
 
HONG KONG (S&P Global Ratings) March 6, 2017--Market concern over China's 
slowing economic growth and the potential downside risk from a structural 
adjustment have not dampened new issuance activity in the nation's 
securitization market, according to a recently published report by S&P Global 
Ratings. China's securitization market recorded more than RMB858 billion 
(US$124 billion) of new issuance in 2016, up 40% from a year earlier, with no 
major deterioration in the performance of retail receivables securitized. 
 
The strong growth in issuance of residential mortgage-backed securities (RMBS) 
and new transactions under the securitization scheme managed by the China 
Securities Regulatory Commission (CSRC) has compensated for the slowdown in 
collateralized loan obligation (CLO) transactions, according to the 
"Securitization Performance Watch: China" report for the fourth quarter (Q4) 
of 2016. 
 
The short duration of notes and low net losses in auto loan securitization 
limit investors' exposure to credit risks. Asset performance remained stable 
in Q4 2016. We expect credit performance in China auto loan securitization 
transactions to be robust during the next 1-2 years, thanks to mild 
competition in the auto loan industry as well as the stable product offerings 
and structural arrangements of transactions. 
 
Households' relatively low leverage and increased income as well as the lower 
loan-to-value ratios of China mortgages continued to support debt 
serviceability. This is reflected in the low cumulative default rate of 
residential mortgage loans backing RMBS transactions in China. 
 
The asset performance of CLO transactions could be more volatile than the 
retail receivables sector due to their direct exposure to corporate credits 
that are highly sensitive to the macroeconomic condition. However, the effect 
on transactions could be limited due to more conservative asset selection and 
structural arrangements in these transactions. 
 
"Securitization Performance Watch: China" provides a comprehensive review of 
the issuance activities and deal performance in China's securitization market. 
The report can be found at "http://www.sfsurveillance.com.au". Members of the 
media seeking a copy can contact Richard Noonan at (61) 3 9631 2152 or 
richard.noonan@spglobal.com. 
 
Only a rating committee may determine a rating action and this report does not 
constitute a rating action. 
 
The report is available to subscribers of RatingsDirect at 
www.globalcreditportal.com and at www.spcapitaliq.com. If you are not a 
RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 
212-438-7280 or sending an e-mail to research_request@spglobal.com. Ratings 
information can also be found on the S&P Global Ratings' public website by 
using the Ratings search box located in the left column at 
www.standardandpoors.com. Members of the media may request a copy of this 
report by contacting the media representative provided. 
 
Primary Credit Analyst: Aaron Lei, Hong Kong (852) 2533-3567; 
                        aaron.lei@spglobal.com 
Secondary Contact: Jerry Fang, Hong Kong (852) 2533-3518; 
                   jerry.fang@spglobal.com 
 
 
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All rights reserved. 
 
 

(END) Dow Jones Newswires

March 05, 2017 17:29 ET (22:29 GMT)
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