Securitization helps fund Chinese SME lenders


ET Net News Agency, 28 April 2015] Moody’s Investors Service said that securitization of small and medium-sized enterprise (SME) and micro loans (collectively, small loans) –a sector traditionally underserved by Chinese banks — is credit positive, because it will diversify funding channels to SME and micro enterprises and pave the way for internet finance providers to grow into privately-owned commercial banks in China (Aa3 stable).

Ant Micro Loan — an affiliate of Alibaba Group Holding Limited (A1 stable) — in December 2014 became one of the first small loan lenders approved by the China Insurance Regulatory Commission (CIRC) to issue asset-backed securities (ABS) backed by micro loans.

“The Ant Micro Loan deal highlights that securitization can help fund micro loan lenders’ activities, and also be an important funding avenue for such groups with ambitions to grow their internet finance business and expand into wider banking services,”said Georgina Lee, a Moody’s Assistant Vice President and Research Writer.

“The China Banking Regulatory Commission (CBRC) has indicated that it is prepared to license more privately-owned commercial banks, stating it as a top priority for the year — which could pave the way for securitization by internet banks and free up funding for the country’s SME and micro enterprises sector,” added Lee.