ABC Issues First Credit Asset Securitization Product
OREANDA-NEWS. May 22, 2014. Agricultural Bank of China Limited (ABC) issued its first credit asset securitization product - the 2014 ABC Credit Asset-backed Securities Phase I (ABC Phase I).
Issued into the interbank market, the total value of this first ABC credit asset security reached RMB2,121.75 million. Thanks to the rational structure design, good timing and effective communication, this issuance was snapped up by investors with an average subscription ratio of nearly 1.5 times. A large number of non-banking financial institutions invested in the ABC Phase I as well, and interest rates at all levels met or approached the lower limit of the bidding range, lower than recently issued similar products across the board. Thus,ABC Phase I is recognized by relevant institutions as a market benchmark.
In ABC Phase I, RMB500 million was issued on Level A-1 with the coupon rate of 5.65%, RMB1,035 million issued on Level A-2 with the coupon rate of 5.5%, and RMB335 million issued on Level B with the coupon rate of 6.9%. CITIC Trust Co., Ltd. acted as the fiduciary institution for the issuance. In support of investors’ due diligence process, two rating organizations accredtied this issuance - China Chengxin International Credit Rating Co., Ltd. and China Credit Rating Co., Ltd. Meanwhile, complying with regulatory requirements, ABC held 5.03% of subordinated securities, thus guaranteeing the interests of the originating institution and investors.
The successful issuance of ABC Phase I by ABC is in response to the state’s decision and deployment of expanding pilot projects of credit asset securitization, to revitalize existing funds, to support economic structure adjustment, transformation, and to upgrade with financing. As an innovative means for ABC to proactively adapt to market development, flexibly adjust the scale of risk assets and reduce its total volume, and increase the capital adequacy ratio, ABC Phase I helps ABC transform its corporate banking business and improve its revenue structure.
The successful issuance of ABC Phase I has set the stage for ABC to further promote credit asset securitization. On that basis, it will orderly expand this business, continuously improve risk management, and asset-liabilities structure, and contribute to perfecting the multilayer financial market system of China.
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