SHANGHAI: Industrial and Commercial Bank of China Limited (ICBC), the country’s largest listed bank, plans to sell 11.3 billion Yuan ($1.83 billion) of asset backed securities (ABS).
China is expanding asset securities representing on an unprecedented scale as the government looks to increase bank liquidity without expanding the money supply.
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ABS is securities created by packaging together a pool of underlying assets, typically small loans that are difficult to sell individually. The underlying asset quality is very good and borrowers will be those in state supported key industries.
The securities will be backed by an underlying asset pool drawn from loans to the railway and transportation sector and will be divided between an AAA rated senior tranche, which accounts for 92.6 per cent, and a junior tranche.
Borrowers include China Railway Construction Corporation (CRCC) and its subsidiaries, as well as firms established by CRCC together with provincial governments.
At the end of 2013, Chinese financial institutions had issued a combined 140.9 billion Yuan ($23 billion) of ABS products since the program was launched in 2005.
