In a widely anticipated move, the China Securities Regulatory Commission (CSRC) has given the go-ahead for local fund managers to buy ABS products, effective immediately.
With securitization still in its infancy in the People's Republic, regulators have to this point kept tight control over who can buy ABS deals, limiting participation to banks, brokerages, government agencies and insurance companies.
Fund managers will now be allowed to trade securities on the interbank market and local stock exchanges. However, the CSRC imposed a 10% limit on their involvement on any one offering, while funds cannot hold more than 20% of ABS bonds in their overall portfolio.
Meanwhile, Japan's Shinsei Bank is lining up to acquire a 32% holding in Taiwan's Jih Sun Financial Holdings for 40 billion ($356.2 million). Jih Sun, which includes a securities firm and commercial bank under its banner, has assets of $1.1 billion under management.
However, group profits have suffered due to the level of nonperforming loans (NPLs) sitting on the commercial bank's balance sheet. Shinsei believes its expertise in selling and securitizing NPLs in Japan and Korea will play a significant role in the resolution effort. Jih Sun's commercial banking unit already has prior experience of securitization. In September 2004, the bank completed an $118 million cross-border auto loan ABS, arranged by HypoVereinsbank (ASR, 09/27/04).
It's a no go
Elsewhere, Hong Kong Link Real Estate Investment Trust has disappointed several ABS arrangers in the region by opting against a CMBS refinancing of a HK$12.5 billion ($1.6 billion) bridge loan (ASR, 02/06/06).
Link REIT, which manages $3 billion of assets sold by the Hong Kong Housing Authority last November, had been widely expected to favor securitization as a means to get competitive pricing for a longer maturity than available in other markets. Ultimately, the trust has opted to do a straight bond, hiring HSBC and Goldman Sachs as joint leads.
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