CIRC lobbies for insurers’ right to buy China’s first ABS

China’s insurance regulator is considering allowing mainland insurers to buy asset-backed securities (ABS) issued by two Chinese banks slated to go on sale in September, Hong Kong's local English-language newspaper has reported.

The report in the South China Morning Post today quoted an official of China Life Insurance, China’s largest life insurer, as saying his company would be keen to subscribe to the upcoming ABS issues if the China Insurance Regulatory Commission (CIRC) does relax the restrictions.

“If the CIRC successfully lobbies for insurers to buy the securities in the upcoming pilot programme, China Life would be keen to do so,” the paper quoted vice-president Liu Jiade of China Life Insurance as saying.

Trial rules for loan securitisation were issued on April 20 by the People’s Bank of China (PBOC) and the banking regulator, the China Banking Regulatory Commission (CBRC).

A month earlier, the PBOC had given the go-ahead to two pilot securitisation schemes – one mortgage-backed deal from China Construction Bank, which is working with Standard Chartered and law firm Freshfields Bruckhaus Deringer; and one collateralised loan obligation of infrastructure loans from China Development Bank, which is being advised by Lehman Brothers and consultants Deloitte Touche.

Both banks won approval to securitise assets worth RMB10 billion ($1.2 billion). The first tranches of the two ABS deals are expected to go on sale next month, the report added.