Agricultural Bank of China Announces Sale of $464 Million in NPL Backed Securities

On Friday, July 22nd, the Agricultural Bank of China announced plans to sell 3.06 billion yuan ($464 million) of securities backed by non-performing loans (NPLs). According to a recent report byReuters, the sale represents part of a broader strategy by Chinese authorities to reduce corporate debt, perceived as a major source of risk for the country’s economy. The securities are backed by 10.7 billion yuan ($1.6 billion) in secured loans, made to 204 borrowers operating in industries such as “wholesale, manufacturing, real estate and transportation.”

The move represents the biggest asset sale yet under the Government’s pilot program, and only the third sale of securities backed by NPLs since 2008. In reference to the program, Elaine Ng, analyst at Moody's Investors Service, has said that "it will be good for ABS market diversity if there are more NPL securitizations from different banks."

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