The worsening crisis of US sub-prime loan market has had a ripple effect on the entire structured product market. Even prime mortgage-backed securities and credit card receivables are facing revaluation.
China, however, is holding over US$100 billion in the US asset-backed securities (ABS). In spite of this, experts say China does not need to be worried. Due to a well-balanced investment strategy, the US government will insure China's cash flow.
The Report on Foreign Portfolio Holdings of U.S. Securities, issued by the US this May, shows that China-held US ABS is valued at US$107 billion among the agency's long-term debts. Corporate long-term debts are at US$15 billion. The report notes that the agency ABS is backed by mortgage-backed securities (MBS) issued by the mortgage giants Fannie Mae, Freddie Mac and Ginnie Mae. Although some of them were privatized when the housing finance market underwent restructuring the US government supports them all.
For more details, please read the full story in Chinese. (http://www.china-cbn.com/s/n/000002/20070808/000000075255.shtml)
(China.org.cn August 8 2007)
