China has announced plans to launch a new pilot securitization
program that will allow some Chinese commercial lenders to
securitize financial assets.1 Recent news reports
indicate that the trial securitization program will involve up to
$7.9 billion of securitized assets.2 Eligible assets are
likely to include, among others, loans to local Chinese government
financing vehicles, which would address what has been an area of
significant concern.3 One academic advisor to the
People's Bank of China noted that asset securitization could
help Chinese banks transform illiquid assets into liquid
assets.4
"Based on the results of the pilot securitization program,
we would gradually promote asset securitization," said Jin Qi,
assistant governor of the People's Bank of China.5
According to recent news reports, it will probably be another two
years before securitizations directed at foreign investors will be
permitted in China.6 The pilot program transactions will
likely trade
