Search China Travel News:

Orient Asset Management Corp., one of China¡¯s four State-owned debt-clearing firms, is planning to securitize 8 billion yuan (US$986.4 million) in nonperforming loans (NPLs) acquired from China Construction Bank Corp., an Orient official said yesterday.

The bad loans originated in the northeastern port city of Dalian, the official told reporters.

Orient was originally set up in 1999 to deal with nonperforming loans from Bank of China, the country¡¯s third-largest bank, but has since diversified into buying assets from elsewhere.

Mei Xingbao, Orient's chairman, said last week it was a must for the asset management firms to securitize their bad assets.

China opened the market for asset-backed securities this year by approving issues by China Unicom Ltd., the smaller of China's two mobile phone heavyweights, China Development Bank and China Construction Bank Corp.

China Development Bank, after selling 4.18 billion yuan in asset-backed securities (ABS) two weeks ago, will launch a second issue this week worth 5.8 billion yuan, according to bankers in Shanghai.

¡°China stands to become one of the most expansive securitization markets in Asia given the size of its asset base,¡± said Jet Zhou with Fitch rating agency¡¯s structured finance team in Beijing.

China¡¯s enterprises and financial institutions have an urgent need to securitize their assets to raise funds at low cost, while institutional investors are crying out for a more diversified product range, Zhou said.

¡°If the government beefs up the infrastructure of the market and expands the program, I believe the ABS market will witness a boom similar to that in the commercial paper market,¡± he said.

Corporations have issued about 100 billion yuan of commercial paper since the People¡¯s Bank of China gave its green light to the market in May.