HSBC Plans First ABS Offering in China by Foreign Bank

HSBC Holdings Plc plans to sell the first asset-backed securities in China by a foreign bank as the nation’s authorities accelerate development of the market.

The biggest bank in Europe will offer 1.35 billion yuan ($217.8 million) of the notes on Jan. 15, according to a statement on Chinabond website yesterday. The lead underwriters are Citic Securities Co. and Bank of Communications Co.

Premier Li Keqiang has encouraged lenders to make room on their balance sheets for new financing as economic growth is set for the slowest pace in more than two decades. Banks have issued 267.7 billion yuan of notes backed by loans in 2014, compared with 15.8 billion yuan last year, Bloomberg-compiled data show.

Asset-backed securitization, in which lenders package loans into collateral for note sales, can help banks make room on their balance sheets for new lending. The practice has attracted global regulatory focus since the 2008 financial crisis, when loans to subprime home buyers in the U.S. went bad.

China resumed ABS approvals in 2012 amid steps to expand fundraising channels after halting the development in 2009.

— With assistance by Judy Chen

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