Chinese RMBS Performing Well In Initial Stages

Chinese RMBS are performing well in their early stages, according to Fitch Ratings. This is attributed partly to the "vanilla" mortgage features within the transactions issued to date, which reflects strong transparency standards.

There have been 12 transactions across eight different commercial banks to date in the market, amounting to RMB28.03bn (USD4.28bn). Among the 12 deals, 10 are not sufficiently seasoned to produce significant data, but the agency's initial observations have identified a steady performance across the board.

Meanwhile, the agency notes a total RMB95.7bn (USD14.7bn) in structured finance deals priced in 1Q16, 53 percent of which was under the Chinese Credit Asset Securitization (CAS) scheme. This was an 11 percent year-on-year drop for the CAS issuance, resulting from the decline of CLO issuance due to lower growth and corporate funding needs across China.

However, RMBS and auto loan ABS grew steadily in the quarter, along with two consumer loan ABS deals. The highest default rate from all auto loan ABS issues has reached approximately 1.4 percent, compared to 1 percent for all RMBS issues.

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