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China’s asset securitization market booms in 2015

Updated: Jan 18,2016 9:05 PM     Xinhua

BEIJING — China’s asset securitization products surged last year thanks to a pilot program that provided greater operational flexibility for banks’ liquidity and capital management.

Asset securitization, generally, is the transformation of non-liquid assets into securities, for example into instruments that can be traded on the capital market.

The issuance of asset securitization products amounted more than 593 billion yuan ($89.8 billion) in 2015, a 79-percent increase from 2014, China Central Depository & Clearing (CCDC) said on Jan 18.

Outstanding asset securitization was 717.9 billion yuan as of the end of December last year, surging 128 percent year on year from 2014, according to the CCDC report.

The report predicts that the asset securitization market will hit around 1 trillion yuan in 2016.

Securitization in China officially started in 2005 when financial regulators launched a pilot program allowing banks to package loans into tradable securities.

The program gained little traction in the first few years and was shelved with the onset of the global financial crisis in 2008 as products like mortgage-backed securities were pinpointed as causing the havoc.

The program restarted in 2012, on the back of policy support that streamlined operations.