China Development Bank to launch asset securitization this year

The China Development Bank (CDB) will launch asset securitization this year after about three years of preparation, said CDB President Chen Yuan Tuesday at the on- going Shanghai Forum.

Earlier this year, authorities ratified the asset securitization plans in the China Development Bank (CDB) and China Construction Bank (CCB).

Asset securitization, generally, is the transformation of non- liquid assets into securities, for example, into an instrument that can be traded in a capital market.

The CCB, one of the country's Big Four state-owned commercial banks, will launch the asset securitization move backed by housing mortgage loans.

The CDB, a policy bank whose loans largely go to construction of infrastructure, was given the green light to securitize its loan assets, involving electric power, railway, high ways, airports, ports and other public facilities, and energy industries including oil and natural gas.

Chen said the CDB hoped that asset securitization will contribute to the long-term investment in infrastructure construction and capital markets. Asset securitization in the CDB will first be operated between banks and then at the securities exchanges, he said.

Securitization, which originated in the United States in the 1970s, has become a major financial instrument in modern finance. It bridges currency and capital markets. It also translates, eventually, assets into cash flow, which is of vital importance to investors and the financial market.

Source: Xinhua