ecns [expanded by feedex.net]: Securitization seen to double this year

ecns [expanded by feedex.net]

ecns

Securitization seen to double this year
http://www.ecns.cn/business/2015/03-05/156748.shtml
Mar 5th 2015, 00:07

2015-03-05 09:07 Shanghai Daily Web Editor: Qian Ruisha


China's nascent securitization market may double this year as the regulator simplifies issuance procedures and falling interest rates will support investment demand, Moody's Investors Service said yesterday.


Securitization refers to the practice of pooling debts like mortgages, auto loans, credit card debts and corporate loans to a third party as securities.


China launched the practice in 2005 but stopped it on risk management concerns during the 2008 financial crisis as opaque operations in the US securitization market caused great losses to investors and a triggered global turbulence.


China allowed the practice again in 2012 and the interbank securitization market boomed in 2014 to 280 billion yuan (US$45 billion) from about 16 billion yuan in the previous year.


Moody's expects the interbank market involving large institutional players to rise to 500 billion yuan this year, and the smaller securities exchange market to grow from 30 billion yuan to between 100 billion and 200 billion yuan.


"The strong issuance seen in 2014 has attracted both domestic and international investor interest, and we expect this trend to persist as the government continues to develop the market," said Jian Hu, managing director at Moody's.


Last year, a new registration system was unveiled for credit asset securitization so that qualified issuers do not need to apply for regulatory approval case by case.





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