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As the first asset backed securities (ABS) listed for transfer after the filing system was newly adopted for the asset securitization business, “Baoxin Leasing Phase I Asset Backed Securities for Asset Backed Special Plan”, with Hengtai Securities as the plan manager, was successfully listed and transferred on the Shanghai Stock Exchange (SSE) on January 14, 2015, meaning that the asset securitization market has stepped into a new normal.
Since the release of the filing system of asset securitization on November 19, 2014, it has been highly appraised and gained popularity in the market. The asset securitization market, facing a new round of development opportunities, has developed in an even faster manner. “Baoxin Leasing Phase I Asset Backed Securities” is one of the first products that were successfully issued and completed filing procedures at the end of 2014. It took less than 2 weeks from submitting listing application by Hengtai Securities to the issuance of no-dissent letter by the SSE. Each link, including listing and transfer application, performance of filing procedures, and registration formalities, is of high efficiency and transparency. The issuance scale of the ABS this time reached RMB405 million, with RMB361 million at the preferred level (to be issued to qualified investors) and RMB44 million at the subordinated level (to be purchased by Baoxin Leasing in full amount). The preferred level is further divided into 3 sub-levels: preferred A-1, preferred A-2, and preferred -B. The credit rating for preferred A is AAA, and the interest rates of preferred A-1 and preferred A-2 are 6.15% and 6.20% respectively. The underlying asset of this product is the leasing creditor’s right Baoxin Leasing transferred to the asset backed special plan. The product adopts multiple measures on credit enhancement including preferred/subordinated structure and deficiency payment commitment, with an aim to protect investors’ rights and interests. The successful case of Baoxin Leasing presents an ideal example for the leasing industry to adopt asset securitization as a regular instrument to tap idle assets.
According to a business official of the SSE, the SSE has handled dozens of asset securitization projects after the adoption of the filing system a month before, involving such underlying asset types as commercial property rental, creditor’s right of account receivable, creditor’s right of financial leasing contract, creditor’s right of petty loan, charging right of infrastructure, creditor’s right of entrusted loan, and public transportation fees. So far, the SSE has issued to several ABS projects the no-dissent letters of planning to approve their listing and transfer, and such projects as Baoxin Leasing, Minmetals Development Account Receivable, and Hanhua Creditor’s Right of Petty Loan have successfully launched. In the next step, the SSE will, under the guidance of the regulatory departments, focus on the development of the asset securitization market and carry out work in the following 3 aspects: first, for product, the SSE will cooperate with market entities to jointly promote innovative development of the market according to the requirement of streamlining administration and decentralizing authority, and accelerate the launch of securitization products based on major underlying assets; second, for market organization and construction of supporting systems, the SSE will provide one-stop service for issuance and listing of asset securitization products, and continue to enhance market promotion, cultivation and innovation. Meanwhile, it will coordinate to promote solutions to issues such as laws, accounting, tax, and change of mortgage and pledge that could be involved in asset securitization business. Third, for the liquidity of the secondary market, the SSE will further improve the trading settlement mechanism and expand diversified investors. Currently, it is sparing no efforts to release collateralized agreed repo of bonds to provide diversified repo financing instruments for asset securitization products and other fixed income products.
