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Fitch: China's Structured Finance Market to Continue Expanding in 2017
March 13, 2017 / 2:51 AM / 9 months ago

Fitch: China's Structured Finance Market to Continue Expanding in 2017

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: China Structured Finance Quarterly - 4Q16 here BEIJING/HONG KONG, March 12 (Fitch) Issuance in China's structured finance market rose 42% to a record high CNY865 billion (USD126 billion) in 2016 and should continue expanding the size and breadth of its asset classes in 2017, says Fitch Ratings in the agency's latest China Structured Finance Quarterly publication. The significant growth was largely driven by the 125% increase in issuance under the Asset-Backed Specific Plan (ABSP) scheme to CNY459 billion, as exchange markets aimed to attract corporate issuers with more diverse underlying asset classes. Fitch rated the Shanghe 2016-1 Retail Auto Mortgage Loan Securitization Trust ABS transaction in 4Q16, which was originated by Shanghai Automotive Group Finance Co., Ltd. This was the first time Fitch rated a Chinese auto-loan ABS transaction originated by a domestic finance company that is part of a Chinese auto group, as opposed to a subsidiary or joint venture of an international auto finance company. The senior notes in Shanghe 2016-1 were rated 'AAsf'. Fitch has a Stable Outlook on all its rated auto-loan ABS transactions, reflecting steady asset performance and strong credit enhancement levels. Fitch believes asset performance in the auto loan ABS sector will remain stable in 2017; there may be a slight deterioration due to slowing economic growth, but not to an extent that would affect ratings. Prices in China's housing market increased substantially in 2016, prompting regulatory changes to cool the market, including purchase restrictions, increasing minimum loan/value ratios, higher taxes and adjusted interest rates. None of the regulations appear to be negative for the credit quality of housing loans and Fitch expects the rise in property prices, steady growth in urban disposable incomes and record-low interest rates to continue supporting the steady performance of RMBS transactions in 2017. The 4Q16's highlight was the continued issuance of Asset-Backed Note (ABN) scheme with special-purpose trust (SPT) structure transactions, after the National Association of Financial Market Institutional Investors amended the ABN guidelines in December 2016. Fitch believes a migration of transactions from the ABSP scheme to the ABN scheme is likely in 2017, as ABNs with SPT structures may offer a more robust segregation of assets from transaction counterparties and issuers may be keen to tap the deeper investor base in the China's interbank bond market. The quarterly report provides data and commentary on the most recent developments in the Chinese structured finance market. In addition to commentary on the market outlook in 4Q16, the report includes commentary on regulatory developments, a list of Chinese securitisations in the pipeline, as shown in the shelf registration data, and the performance of auto-loan ABS and RMBS in China. A full copy of the report, China Structured Finance Quarterly - 4Q16, can be found at or by clicking on the link at the top of this press release. Contact: Kan Zhou Associate Director +8610 8517 2112 Fitch Ratings (Beijing) Ltd 1903, PICC Tower, 2 Jianguomenwai Avenue, Chaoyang District, Beijing, China Grace Li Director +852 2263 9936 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: Additional information is available on ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. 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