Best firm for securitization 2019
Banks and securities houses have raced to grab market share and come up with new products with higher levels of structural complexity. In a conversation with Asiamoney, one head of structured finance at a securities firm warned that the Chinese asset-backed securities market may have already become too crowded.
However, one securities house has managed to wrap up the year with both a leading market share and a long list of innovative deals that will have a real and lasting impact on the future of China’s ABS market.Citic Securities (CiticS), a Beijing-based firm incorporated in 1995, put an end to China Merchants Securities’ three-year dominance at the top of the ABS underwriting league table, surpassing the defending champion by a narrow margin of Rmb956 million ($136 million), according to domestic market data provider Wind.
During the awards period, CiticS underwrote 196 deals in the interbank and exchange markets, with a total value of Rmb231.4 billion ($32.8 billion), boasting a 10.8% market share, according to Wind.
It also topped both the auto ABS and Account-receivables securitization underwriting league tables and maintained a top three position in other asset classes including financial lease ABS, commercial mortgage-backed securities and residential mortgage-backed securities.
Apart from a dominant market share, CiticS has been a pioneer of innovation in mainland China. During the awards period, CiticS underwrote multiple landmark deals such as the first shelf CMBS for the logistics industry for GLP, the first ‘New Economy’ supply chain ABS for Xiaomi and the first ABS deal to provide credit default swaps for a mezzanine tranche for JD.com.
The firm had a role in the growth of the country’s quasi-Reit (real estate investment trust) industry. CiticS structured and underwrote Cainiao Zhonglian CiticS China Smart Logistic Network Storage ABS in March. The underlying assets are logistics warehouses of Cainiao, a subsidiary of the e-commerce firm Alibaba.
The deal was the first in the onshore market to allow consecutive injections of assets and funds into the same product. Previously, China’s so-called quasi-Reits were essentially privately issued closed-end funds with no secondary liquidity.
The securitization business was of strategic importance to CiticS from the beginning. It established a company-level securitization department in January 2006.CiticS’s early efforts have surely paid off. With 70 professionals in its securitization team now, it is able to serve a large group of some 200 originators and covers 19 out of 23 asset classes for ABS, the widest range among all market players. It has also been frequently called upon by regulators to provide feedback on new policies.
CiticS has arranged and sold some of the most innovative deals in China’s securitization market this year. But more importantly, in a fast-growing market flooded by ‘firsts’ with no follow-ups, CiticS has designed deals that can serve as real references for others and solved some long-lasting challenges in the Chinese ABS market.