As further evidence of the state's commitment to developing securitization in the People's Republic of China, the state bank, People's Bank of China, last week published new ABS guidelines on its Website.

Heads of Asian ABS at foreign investment banks were still studying the guidelines to see what assets may or may not be securitized under the rules, prior to commenting on what hurdles still lay ahead. Even so, the initial consensus was that it is a positive first step towards establishing a proper framework for issuance.

The guidelines include a rule that all deals must be approved by the People's Bank and the China Banking Regulatory Commission, have credit ratings, while underwriters must have registered capital of at least Rmb200 million ($24 million), wide distribution channels and no record of misconduct.

Market participants are eagerly awaiting two pilot ABS schemes being developed by China Construction Bank and China Development Bank. At the end of March, PBC gave final approval to China Construction's mortgage-backed offering and China Development's CLO, backed by infrastructure loans.

Standard Chartered is structuring the China Construction deal, while Lehman Brothers and Deloitte Touche are acting on behalf of China Development. Each has approval to package loans worth Rmb10 billion. A June launch is anticipated for China Construction's issue.

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