On June 30, 2015, No. 1 Huifu Wuhan Personal Housing Accumulation Fund Loans-backed Securities Program was successfully launched. The RMB500mln program included RMB475mln worth of senior securities and 25mln subordinate ones. The senior ones would be traded on Shanghai Stock Exchange.

Wuhan Personal Housing Accumulation Fund Management Center is the originator, with Minsheng Bank acting as trustee bank and asset manager, Minsheng Royal Asset Management Co., Ltd. as arranger, Citi Orient as financial advisor and lead underwriter, Dacheng as legal counsel, and Shanghai Brilliance Credit Rating & Investors Services Co., Ltd. as the credit rating agency.

A Dacheng team led by Beijing-based of council Wang Lihong provided a number of innovative and critical legal solutions in relation to the structure of the transaction. The team also included partner Han Jing, attorneys He Yuhua, Sun Chao, Yin Chen, Lv Xiaxi, and Zheng Wenjing. The successfully offering of the securities is a meaningful attempt in that it has innovated the type of underlying assets for securitization and opened a direct financing channel in the capital markets for housing accumulation fund loans via securitization. It has also activated the stock assets of the loans and improved use efficiency of housing accumulation funds.

The ABS program, instructed by experts from Shanghai Stock Exchange, was structured with novelty. The underlying assets, i.e., personal housing accumulation fund loans, boast such features as stable flow of proceeds, low risk, good credit, small and decentralized amounts, and good asset quality. By classifying the securities into senior/subordinate ones and applying over-collateralization, problems occurring in the securitization process such as that the loans are mostly long-term, of low interest rate, and are geographically concentrated, could be overcome. The argumentation process for the underlying assets went on smoothly and the senior securities gained an AAA rating.

Funds raised from the ABS program would be used to meet the rigid demand of home loans of employees in Wuhan who have paid contributions to their housing accumulation fund accounts. With higher rate of return than RMBS issued by banks, the securities are suitable for conservative investors who tend to favor insurance fund and social security fund-related investment products.