Industrial and Commercial Bank of China Ltd (ICBC), the country's largest listed bank, plans to sell 11.3 billion CNY (1.83 billion USD) of asset-backed securities (ABS).Â
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ABS are securities created by packaging together a pool of underlying assets, typically small loans that are difficult to sell individually.
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China is expanding asset securitization on an unprecedented scale as the government looks to increase bank liquidity without expanding the money supply.
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The memo said the securities will be backed by an underlying asset pool drawn from loans to the railway and transportation sector and will be divided between an AAA-rated senior tranche, which accounts for 92.6 percent, and a junior tranche.
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The release date has not yet been determined.
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"The underlying asset quality is very good, borrowers will be those in state-supported key industries," sources said.
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Borrowers include China Railway Construction Corporation (CRCC) and its subsidiaries, as well as firms established by CRCC together with provincial governments.
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ICBC did not respond to several calls seeking comment.
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At the end of 2013, Chinese financial institutions had issued a combined 140.9 billion CNY (23 billion USD) of ABS products since the program was launched in 2005, according to media in China.
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The country's banking regulator started to manage issuances of ABS through a registration system in November, simplifying the process.Â