China's securitization market will be propped up by ongoing funding needs, conservative asset underwriting and transaction repayment structures in 2019, S&P Global Ratings said on Thursday.
China's asset performance was stable in 2018 and will keep the trend in 2019, with "stable employment, rising household income and wealth, shorter loan tenors, and the full-amortization nature of most loans supported debt serviceability" in the auto loan asset-backed securities and residential mortgage-backed securities sectors, according to an S&P report.
S&P Global Ratings expects China's securitization issuance to grow a bit in 2019, with some 310-billion-dollar equivalent of new notes being offered, up from 290 billion dollars issuance in 2018.
China's finance ministry declared late November 2018 that the country will exempt overseas institutional investors from paying corporate income tax and value-added tax on their interest gains derived from investment in China's onshore bond market for three years starting Nov. 7, 2018.
S&P believes the tax exemption will attract more overseas investors to China's securitization market this year.
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