Best firm for auto ABS 2018
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AwardsChina Securitization Awards

Best firm for auto ABS 2018


Kyson Ho, HSBC
Kyson Ho

Over the year, HSBC has established itself as one of the leaders in the securitization market in China, having become the first foreign bank to act as sub-underwriter, and then a joint lead underwriter, in 2015. Since then, it has earned a reputation as a savvy player in China’s fast-growing market under Kyson Ho, head of structured finance.

While auto ABS is the bread-and-butter for HSBC’s China securitization business, it is also safe to say that the auto ABS market would not be the same today without the likes of HSBC and its foreign bank peers.

By leveraging its expertise in global markets and its broad client network, HSBC played a crucial role in helping to establish auto ABS as the most globalized asset class in onshore China securitization. Auto ABS has served as the stepping stone for many international investors looking in on China in the past, especially before Bond Connect came about in July 2017, making other products such as RMBS and ABN more accessible to a wider range of accounts.

Since becoming the first foreign bank to lead underwrite an onshore auto ABS transaction, HSBC has worked on 13 such deals as a joint lead underwriter as of September 30, 2018, working repeatedly with a broad range of foreign and domestic originators, such as BMW, Ford, Dongfeng Nissan, GAC-Sofinco, SAIC-GMAC, Mercedes-Benz and Volkswagen.

When asked about HSBC, even its onshore rivals – both banks and securities houses – give credit to its capability in structuring complicated deals, advising on international ratings and bringing in offshore investors. Thanks to the presence of HSBC (China), its renminbi platform and the bank’s global markets’ capability, HSBC is also able to provide hedging, as well as financing solutions to investors interested in China ABS.

During our awards period, HSBC worked on Ford Automotive Finance (China)’s Fuyuan 2018-2 in August, achieving the tightest pricing for any securitization deal in the interbank market at the time. The transaction, where HSBC acted as the sole financial adviser and a joint lead underwriter, came under a new structure to the originator that featured a fixed-rate, fixed-schedule class A1 tranche and a floating-rate, pass-through class A2. Much time and effort were needed to convince the originator and to educate investors so that both parties were comfortable.

Some foreign banks depend entirely on foreign originators to drive their business in China’s ABS market. Instead, HSBC is actively sourcing business from originators, with a more domestic focus such as SAIC-GMAC and GAC-Sofinco, diversifying into a broader client base.

HSBC was the financial adviser and a sub-underwriter on SAIC-GMAC’s Rmb10 billion ($1.4 billion) Rongteng 2018-2, a deal that was comfortably oversubscribed despite being the largest auto ABS transaction China has seen. It worked as the structuring adviser and a joint lead underwriter for GAC-Sofinco’s first Bond Connect-eligible auto ABS, the Rmb4 billion Huitong 2018-1 trade, as well as a joint lead underwriter and financial adviser for its first auto ABS deal with an international rating (AA+ by Fitch), Huitong 2017-1.