Consumer Finance Asset-backed Securities See Sizeable Decline in China for 2018


New data points to a sizeable drop Chinese consumer finance asset-backed securities (ABS) in 2018, as well as the market dominance of Alibaba-affiliate Ant Financial.

Rong 360 data indicates that 2018 saw the issuance of a total of 104 consumer finance ABS in China with a total issuance value of 280 billion yuan, or 55% the figure for 2017.

Consumer finance ABS issuance hit a peak in September with issuance of 20 products worth 72.274 billion yuan, before a sizeable decline in October due to China’s national holiday.

The weighted average senior coupon rate for consumer finance ABS in 2018 was 4.65%, markedly lower than the level of around 5.07% for 2017.

In January the senior coupon rate hit a high 5.98%, before dropping below 5% in August and falling further to 4.09% in November.

As licensed institutions banks enjoyed the lowest average senior coupon rate at just 4.02%, while out of non-licensed institutions Duxiaoman Financial had the lowest rate at 4.25%, followed by fintech peer JD Financial at 4.62%, who issued around 16 billion yuan in products last year.

Ant Financial alone accounted for 53.35% of consumer finance ABS issuance in 2018, via Ant Check Later (蚂蚁花呗), which saw the issuance of 104.2 billion yuan, and Queqianme (蚂蚁借呗), which saw the issuance of 47.55 billion yuan.

Rong 360 analyst Li Wanfu (李万赋) said to Yicai that consumer finance penetration still has considerable room for growth given ongoing gains in household consumption expenditures and e-commerce penetration rates.

This will lead to an ongoing rise in consumer credit levels, increasing the demand of consumer-finance related companies and a robust rebound in 2019 consumer finance ABS issuance in 2019.