Capital Clearance Group launches new note to join in Asia’s Asset Securitization trend

CCG Combined Assets Securitization Note is designed to be a leader among peers and take the financial market by storm.

By Anne Moore

March 30, 2016


Capital Clearance Group launches new note – CCG Combined Assets Securitization Note, with objective is to generate regular income via dividend payout, with a secondary objective to high capital appreciation. It is designed to cater to investors looking at high yield enhancement. This is the 6th note which Capital Clearance Group has issued since the corporation’s inception in 2008.

As most of the notes, it has no fixed investment horizon, it has a yield advantage over other securities.Various value-added investment strategies are employed to manage risk and enhance income – this strategy ensures stellar returns for the note.

CCG Combined Asset Securitization Note comprises mainly secured loans – collateralized micro loans (corporate loans) and corporate debt securities. All loans issued by Capital Clearance Group are backed by collaterals which are higher in value – Asset Backed Securities.

Majority of these loans are denominated in USD and therefore eliminates any currency risk, and the loans portfolio that CCG currently holds on a global scale has swelled to US$350million.

Asset Backed Securities is fast becoming a trend in Asia with China leading the Asset Backed Securities market. China has become Asia’s biggest securitization market with a total value of USD$88.9 Billion. In the past few months, Chinese officials have laid out new rules to expand and quicken the process for lenders to issue debt securities made up of groups of loans bundled together, a practice known as securitization.

Issuance of such asset-backed securities in the world’s second-largest economy rose by a quarter in the first eight months of 2015—to $26.3 billion from $20.8 billion in the same period last year, according to data publisher Dealogic.

Asset securitization helps financial institutions and financing firms free up capital for lending by allowing them to sell off existing loans. That makes it easier for the lenders to give new loans to smaller corporations that typically have less credit available to them.

Leading the drive are big state-owned banks and medium-size financial institutions seeking to unload loans from their loan books by packaging them into products known as collateralized loan obligations (CLOs).

The State Council, China’s cabinet, sets the amount of asset-backed securities allowed to be issued in the country. They said in May last year that it would allow companies to issue up to 500 billion yuan ($78.3 billion) of such securities, though there is no stipulated time frame for that amount. That compares with $49 billion of the securities that were issued in all of 2014.

The Chinese Central Bank and the banking regulator also will speed up the process by allowing select issuers to sell asset-backed securities freely after registering with regulators. Previously, each issue had to be approved on a deal-by-deal basis. China began allowing asset securitization on an experimental basis in 2005. It put the pilot program on hold in 2009 when bonds backed by subprime mortgages were hit hard during the global financial crisis. In 2012, Beijing revived the program, and the State Council said in 2013 it would expand a trial stage.

Beijing’s move to expand the securitization market also marks a step in Premier Li Keqiang’s two-year-old pledge to pursue market reforms. In his first state visit to the U.S. this week, President Xi Jinping said China will press ahead with the plans despite slowing growth and stock-market volatility.

Capital Clearance Group believe China’s strong domestic investor base will make its securitization market more sustainable than those in other parts of Asia, where countries sell their asset-backed securities to offshore investors alone, said Steve Parker, Chief Investment Officer of Capital Clearance Group.

“That is why we have chosen to distribute our CCG Combined Asset Securitization Note in China as well, for it to become a leader among peers.” he said.

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