China Securitization market resilient amid slowing growth

    China's new securitization issuance jumped 35% in the first half of 2019 from a year ago, with new notes offered reaching RMB951.4 billion. The market performance of auto loan asset-backed securities (ABS) and residential mortgage-backed securities (RMBS) remained largely stable despite slowing economic growth.
  That's according to S&P Global Ratings' "Securitization Performance Watch: China," published today.
  Increased issuance from corporate receivables securitization, auto loan ABS, and asset-backed notes issued under China's National Association of Financial Market Institutional Investors' securitization scheme contributed the most to the growth in the first half.
  Issuance activities in collateralized loan obligations and unsecured consumer credit receivables ABS remain subdued.
  New RMBS notes hit RMB194.7 billion, just missing last year's record high volume, albeit with the trend decreasing in the second quarter. Meanwhile, the number of banks issuing RMBS grew significantly, as banks turn to RMBS to fund rising mortgage demand. The cumulative mortgage default rate in most of China's RMBS transactions remained stable and low during the period.
  Auto loan ABS issuance doubled to RMB78.4 billion, driven by repeat issuance from captive auto-finance companies and off a low issuance base in the first half of 2018. In our view, the auto-loan ABS performance remains supported by better customer targeting, enhanced underwriting and risk control at AFCs, and securitization's structural protection.