At Fitch Ratings' Global Structured Finance Conference held in Beijing last week, the rating agency was bullish about the prospects for China's emerging securitization market in 2007.
So far, the officially recognized pilot securitization schemes have from late 2005 seen Rmb13 billion ($1.7 billion) raised through three deals; two by China Development Bank and the other from China Construction Bank.
This year was always likely to be slow while the People's Bank of China and China Banking Regulatory Commission - joint overseers of securitizations by financial institutions - conducted performance analysis of the initial pilot deals.
With the review completed and the deals performing in line with expectations, some relaxation of the approval process is anticipated next year, which should lead to several transactions coming to market.
"If 2007 proceeds as expected, China could see up to 10 securitization deals with a volume of between RMB50 billion to RMB100bn," says Kevin Stephenson, head of the Asia-Pacific structured finance group at Fitch.
However, the agency notes that corporate issuance, conducted through Specific Asset Management Plans programs, may cool off due to credit concerns.
Fitch added cross-border activity from the rest of ex-Japan Asia next year is expected to hit $10 billion from around 20 deals.
Singaporean CMBS
Elsewhere in the region, Singapore's CapitaMall Trust (CMT), the retail-focused real estate investment trust (REIT) established by property developer CapitaLand, has invited bids for its next commercial mortgage-backed offering.
According to a reliable source, nearly every investment bank with an Asian ABS group has submitted proposals for the S$400 million ($257 million) to S$450 million deal, with a decision on the winning pitch expected soon.
The CMBS will be collateralized by rental income generated by the 10 shopping malls in CMT's portfolio. CMT tapped the market in September in a joint S$866 million CMBS with CapitaCommercial Trust, another CapitaLand REIT. The deal, arranged by HSBC, refinanced a bridge loan used in the two entities acquisition of the Raffles City complex in Singapore (ASR, 9/18/06)
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