Credit asset securitization may surpass 500b yuan

China's offering of credit asset securitization in the interbank market this year could at least surpass 500 billion yuan ($79.95 billion), following explosive growth last year, a Moody's Investors Service executive said on Tuesday.

"500 billion yuan is the most conservative estimate," Ma Li, a managing director at Moody's Investors Service, said at a conference on Tuesday.

China's asset securitization offering jumped to 280 billion yuan in 2014 from 16 billion yuan in 2013, a 17.5-fold increase from 2013, and with a commensurate spike in sponsors, according to China Chengxin International Credit Rating Co Ltd, a subsidiary of Moody's.

In this context, China's securitization market is also growing fast by asset type, originator type, the number of investors and third-party service providers, and structural innovations.

"The most significant characteristic of China's securitization market has been the gradual move away from issuing transactions for the purpose of achieving simple visibility and name recognition to achieving real economic benefits. In other words, from regulatory-driven issuance to demand-driven issuance," Ma said.

Recent regulatory and policy changes will also promote future issuance, Moody's said in a report. A new registration system for credit asset securitization means qualified issuers will only be required to register transactions before issuance, as opposed to the previous system where regulators approved transactions on a deal-by-deal basis.

"We expect to see more barriers broken down, with a flurry of new asset classes and originators in 2015, such as equipment lease, real estate loans and consumer loan securitizations, sponsored by both existing and first-time issuers, such as commercial banks, local branches of international banks, financial leasing companies and asset management companies," said Jian Hu, a managing director at Moody's.

"So far, market issuance has been dominated by securitizations backed by corporate loans, and this is unlikely to change soon."