What Is an Asset-Backed Security?

Asset-backed securities are shares of trust beneficiary rights issued by a trustee and representing a specific purpose trust. The trustee shall, within the limit of the trust property, assume the obligation to pay the income of the asset-backed securities to the investment institution. Its payments are basically derived from the cash flows generated by the asset pools that support the securities. Assets under this category are usually financial assets, such as loans or credit receivables, and payments are made according to their terms. The time to pay the principal of asset-backed securities often depends on the time involved in the recovery of the principal of the asset. The inherent unpredictability of the time of such principal recovery and the time of payment of the relevant principal of the relevant asset-backed securities is the difference between asset-backed securities One of the main characteristics of other bonds is the main type of fixed income securities. Assets that can be used as asset-backed securities collateral fall into two categories: existing assets or receivables, and future assets or receivables. The former is called "securitization of existing assets" and the latter is called "securitization of future cash flows". ^[1]

Asset-backed securities

According to the "Administrative Measures for Piloting Credit Asset Securitization" issued by the People's Bank of China and the China Banking Regulatory Commission on April 20, 2005, and

Asset-backed securities came into being in the context of financial securitization and direct financial environment in western countries. They first appeared in the United States in the 1970s.

In the United States, the issuance and trading of asset-backed securities are basically the same as other securities, such as corporate bonds, and are subject to the Securities Act of 1933 and the Securities Exchange Act of 1934. Relevant contents of the Company Law, the Bankruptcy Law, the Investment Trust Law, and special accounting and taxation policies. In Europe, France promulgated the Asset Securitization Law in 1988, the United Kingdom issued the Guidelines on Loan Transfers and Securitization in 1989, and Italy, the Netherlands, and Spain also issued relevant laws regulating the asset-backed securities market.

In Asia, in order to promote the development of asset-backed securities markets, many countries have introduced special laws since the 1990s, such as the "Regulations on the Registration and Sales of Asset-Backed Securities" promulgated by the Philippines in 1991 and the "Asset Securitization Act" introduced by South Korea in 1998 , "Securitization Law" implemented by Thailand in 1998, "Asset Liquidity Law" revised by Japan in 2000, and "Financial Asset Securitization Regulations" promulgated by Taiwan, China in 2002.

In March 2005, China issued the Measures for the Pilot Administration of Credit Asset Securitization Pilots to formally launch a pilot of asset-backed securities business. ^[3]

The process of issuing asset-backed securities is usually as follows: First, the originator of the underlying assets, including commercial banks, savings and loan companies, mortgage companies, credit card service providers, auto finance companies, consumer finance companies, etc. And other assets are sold to its affiliated or third-party special purpose vehicle (SPV) to achieve bankruptcy remoteness of the asset credit and the credit of the initiator, and then the SPV will package the assets and evaluate the tranches ), Credit enhancement (credit enhancement), credit rating and other steps after the public or private offering to investors, product types include simple pass-through security (pass-through security) and complex structured security (structured security), such as MBS (mortgage -backed security), CMO (collateralized mortgage obligation), etc.

Investors in asset-backed securities are mainly banks, insurance companies, money market funds, mutual funds, pension funds and hedge funds. Because most asset-backed securities have different durations, payment structures, credit enhancement methods, etc., their transactions are mostly in

Chinese central bank's application for its issuance

When a trustee issues asset-backed securities in the national interbank bond market, it shall submit the following documents to the People's Bank of China:

1. Application report.

Underwriting organization

1. Build

According to the statistics of the Securities Industry and Financial Markets Association (SIFMA), as of the end of the first quarter of 2008, the balance of US asset-backed securities (including MBS, the same below) was 9.88 trillion US dollars, accounting for 32.34%, is the largest bond variety; the balance of European asset-backed securities is 1.21 trillion euros, mainly concentrated in Britain, Spain, the Netherlands, Italy and other countries. In 2007, the United States issued a total of US $ 2.95 trillion in asset-backed securities, accounting for 47.58% of the total US bond issuance that year; Europe issued a total of 453.7 billion euros in asset-backed securities. In 2007, the average daily trading volume of the US agency MBS (Agency MBS), the highest standardization of asset-backed securities, was approximately US $ 320.1 billion, which was much lower than the average daily transaction volume of national debt of US $ 567.1 billion, and the turnover rate was relatively low.

In December 2005, China Development Bank successfully issued the first credit asset-backed securities in the interbank bond market. According to statistics from the Central Government Bonds Registration Corporation, as of the end of July 2008, China had issued a total of 53.118 billion yuan of asset-backed securities with a balance of 43.44 billion yuan at the end of July. The basic asset types include housing mortgage loans, car loans, high-quality credit assets and non-performing loans. Wait. The transaction methods include spot trading and pledged repurchase. As of the end of July 2008, the total turnover was 15.865 billion yuan. ^[2]

The name of the asset-backed securities should be significantly different from the names of the sponsor, trustee, loan servicer and fund custodian.

Asset-backed securities can be made available to investors

CITIC Securities (06030) announced that CITIC Securities-Boshi Capital Finance Funds Credit No. 1 Asset-backed Special Plan Asset-backed Securities has been fully subscribed and the funds raised have been fully transferred to the Special Plan Custodian on May 30, 2018. Established special plan account, the special plan has met the requirements for establishment, and was officially established on May 30, 2018.

The issue size of the securities is 1.425 billion yuan and the issuance size of the secondary file is 75 million yuan. ^[4]