On May 18, 2015, China Technology Financial Leasing Company Limited (“China Technology Financial Leasing”) launched “Phase I China Technology Financial Leasing Asset-backed Securities Program”. The ABS program is the first securitization program in Southwest China since the ABS filing system was first implemented. A Dacheng team led by Beijing-based senior partner Wang Jie provided legal solutions on key issues such as the standard of entering asset pool, transfer of security interest, and distribution order of cash flows. The team also included attorneys Liu Jinyi and Liu Bing.

China Technology Financial Leasing is the initiator of the ABS program, with Western Securities acting as manager, ICBC Chongqing branch as the custodian bank, ICBC Chongqing Hi-tech branch as the supervising bank. After the securities are issued, they would be traded on the Integrated Electronic Platform for Fixed-income Securities of Shanghai Stock Exchange.  Sized RMB229mln in total and with a maturity of two years, the securities are categorized into senior and subordinate ones. The senior ones, taking up RMB200mln, are subdivided into Class A1, A2, and Class B, which are rated AAA, AAA, and AA+ respectively, according to credit rating agency China Chengxin Securities Rating Company Limited. The subordinate securities, sized RMB29mln, are not rated and are all subscribed by China Technology Financial Leasing. The senior A1 and senior A2 securities are issued at an interest rate of 6.00% and 6.45% respectively.

Since the filing system for ABS programs was first implemented at the end of last year, a new wave of asset-backed securitization has been stirred up. By transfer all types of rights of charge into structured products and adopting unconventional credit enhancement measures, standardized assets are securitized in a convenient way. As the most suited type of assets for securitization, leased assets boasts the advantages of stable future cash flow and aptness for trading. That is why the ABS program in question was favored by Shanghai Stock Exchange, Shenzhen Stock Exchange and many other institutional investors. Meanwhile, with the central government’s push on the development of China’s financial leasing sector and the implementation of relevant supporting policies, financial leasing is becoming one of the important alternative financing channels for enterprises.

China Technology Financial Leasing is a senior member of Chongqing Financial Leasing Industry Association and one of the most representative financial leasing companies in Southwest China. The ABS program in question aims to accelerate the docking of the financial leasing industry in the region and the capital markets. Fund raised from the ABS program will also be used to support the real economy in Chongqing.