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Need some liquidity? Asset securitization has taken off in a big way in China, but those looking for fluid outcomes should first be thoroughly familiar with this mode of financing, writes Richard Li

The asset securitization market in China continued its stellar growth last year, with offerings totalling more than RMB1 trillion (US$158 billion) and the market inventory surpassing RMB2 trillion, according to the 2017 Asset Securitization Development Report issued by China Central Depository & Clearing.

From the highest decision-making levels and the various regulators to the stock exchanges, all are supporting or promoting the development of the asset securitization business.

Macroeconomically, the promotion of asset securitization can help in realizing the goal of “eliminating gearing” in China. For enterprises in need of funding, the greatest effect of asset securitization is converting future cash flow into cash now. The financing costs of asset securitization are relatively low, and the credit rating of a securitization product is based on the quality of the underlying assets, not the credit rating of the enterprise seeking the financing. So this type of financing instrument is particularly attractive to small and medium-sized enterprises. Asset securitization can help enterprises in opening financing channels, enhancing the efficiency of asset utilization and reducing enterprises’ liability ratios.

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TOP 20 CHINA CREDIT ABS DEALS BY VALUE

Data run from 26 February 2017 to 26 February 2018

Source: China Securitization Analytics


TOP 20 CHINA CORPORATE ABS DEALS BY VALUE

Data run from 26 February 2017 to 26 February 2018

Source: China Securitization Analytics

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