A Peek Into China’s Credit Asset Securitization World

China is set to revive Credit Asset Securitization(CAS) indicating a market-based approach to restructuring program.

Wei Yao, an analyst at Societe Generale highlights why policy makers favor a securitization tool and its limitations to pursue ensuing restructuring of non-performing debt.

China’s experiment with CAS

Chronicling the journey of CAS in China, Wei Yao notes CAS got off to a reasonable start in 2005 when the government accelerated policy initiatives to set up the regulatory framework. By 2008, domestic issuance of asset-backed securities rose to CNY70 billion from almost zero.