On Monday two Chinese state-owned asset management companies
issued a total of 3.7 billion yuan (US$474 million) of asset-backed
securities (ABS) for non-performing assets. The ABS issuance was
approved by the People's Bank of China and the China Banking
Regulatory Commission (CBRC).
This is the first time China has issued securitized products for
non-performing assets and also the first move into the
non-performing assets sector since the China Development Bank and
China Construction Bank issued ABS last year.
China Cinda Asset Management Corp. issued three-billion yuan of
ABS and the China Orient Asset Management Corp. 700 million yuan.
The ABS can be traded in the inter-bank bond market and all
investors in the market can invest in the newly issued
securities.
Experts say the issuance of this type of security would make the
handling of non-performing assets more efficient, stimulate the
market and help reduce risks in the financial system.
According to CBRC statistics the country's four state-owned
asset management companies of China Huarong Asset Management Corp.,
China Great Wall Asset Management Corp., Cinda and Orient had
handled a total of 866.3 billion yuan of non-performing assets by
the end of March. Approximately 180.5 billion yuan was retrieved
which is 20.84 percent of the total.
(Xinhua News Agency December 19, 2006)