The 15th Five-Year Plan incorporated asset securitization (ABS), advocating for its steady development. This review examines the 2025 ABS market's regulatory developments, operational performance, and business trends. Considering the current market state and challenges, it recommends thoroughly implementing the 15th Five-Year Plan requirements, optimizing new issuances aligned with the "Five Key Financial Tasks," actively serving the real economy, providing targeted support to key sectors, and fully leveraging the ABS market's functions.
In 2025, China's ABS market (excluding Real Estate Investment Trusts) issued approximately 2.28 trillion yuan worth of various products, with an outstanding balance of about 4.01 trillion yuan by year-end. REITs issued 47.328 billion yuan for the year, reaching a market size of 215.103 billion yuan. The market operated stably with increased issuance volume, continuing its trend of innovation and diversification. Finance lease receivables ABS led in issuance scale, non-performing loan ABS experienced rapid growth, and green ABS product innovation deepened. The ABS market utilized its strengths to positively impact the real economy, revitalize existing assets, and optimize resource allocation.
**Regulatory Developments**
1. **Support for ABS in "Five Key Financial Tasks" Sectors** In March 2025, the General Office of the State Council issued guidelines emphasizing significant progress by 2027 in financing availability and service suitability for major strategies and key sectors. The guidelines specifically support financial institutions in conducting credit ABS business within these key task areas.
2. **Support for Green ABS Issuance and Investment** In January 2025, regulatory authorities released plans urging banks to explore green credit ABS and insurers to invest in green asset-backed securities. Subsequently, the CSRC advocated for enriching green financial products, including supporting eligible enterprises to issue green ABS.
3. **Support for REITs Issuance** CSRC opinions encouraged REITs issuance for new infrastructure projects like AI and data centers, and for elderly care economy assets. Local governments, such as Hubei, promoted asset securitization for state-owned enterprises using REITs and CMBS. The SSE also issued guidelines to standardize REITs expansion processes.
4. **Encouragement of Supply Chain Bill ABS Pilots** A joint notice in April 2025 focused on standardizing supply chain finance and encouraged financial institutions to conduct pilot programs for supply chain bill ABS to broaden financing channels, provided risks are controlled.
5. **Promotion of Retail Loan ABS Expansion** In June 2025, guidelines on financial support for consumption proposed 19 key measures. These included promoting the scale and scope of retail loan ABS for auto loans, consumer loans, and credit cards to revitalize credit stock and enhance consumer credit supply capacity.
**Market Performance**
1. **Increased Issuance Volume and Outstanding Balance** Total ABS issuance in 2025 was 2,280.048 billion yuan, up 15.32% year-on-year. The year-end outstanding balance was 4,009.510 billion yuan, an increase of 4.84%. * Credit ABS issuance was 291.522 billion yuan (+7.82%), accounting for 12.79% of the total. Its outstanding balance was 1,021.489 billion yuan (-11.35%). * Enterprise ABS issuance was 1,415.873 billion yuan (+19.74%), constituting 62.10% of the total. Its outstanding balance was 2,280.666 billion yuan (+13.91%). * ABN issuance was 572.653 billion yuan (+9.22%), making up 25.12%. Its outstanding balance was 707.355 billion yuan (+5.59%).
Auto loan ABS remained the largest credit ABS segment. Finance lease receivables, enterprise accounts receivable, and small loan receivables led Enterprise ABS issuance. Consumer loan ABN, small loan ABN, and accounts receivable ABN were the top ABN categories.
2. **Continued Decline in Issuance Rates** ABS issuance rates trended downward throughout 2025. * Credit ABS: Average rates for Senior A and B tranches fell by 20 BP and 22 BP, respectively. * Enterprise ABS: Average rates for Senior A and B tranches decreased by 32 BP and 16 BP. * ABN: Average rates for Senior A and B tranches declined by 32 BP and 23 BP. Rates for consumer finance ABS, corporate lease ABS, and corporate credit-backed ABS also showed slight declines or fluctuations over the year.
3. **Declining Yield Trends with Differentiated Credit Spreads** The ChinaBond ABS Index returned approximately 2.21% for the year, down 1.46% from the previous year. Yields generally rose in Q1 before retreating near年初 levels in subsequent quarters. Credit spreads for various 1-year AAA-rated ABS categories narrowed against government bonds, while the 5-year RMBS spread remained largely unchanged.
4. **Discrepancy Between Agency Ratings and Implied Ratings** New ABS issues were predominantly high-grade. Differences were most notable in Enterprise ABS between official agency ratings and ChinaBond implied ratings. The proportion of issues rated AA+ and above was significantly higher by agencies compared to implied ratings across all ABS types.
5. **Decreased Liquidity** Secondary market liquidity for ABS declined. Settled volume for centrally custodied credit ABS fell by 14.79% year-on-year, with a turnover rate of 13.93%, lower than the overall bond market average.
**Market Business Trends**
1. **Expansion of Underlying Assets Supports Digital Finance** The market saw pioneering ABS with data assets and data infrastructure as underlying assets. Landmark deals included the first data center equity ABS, the first data asset ABS, and the first elderly care economy ABS incorporating data intellectual property.
2. **New Credit ABS Registration Rules Implemented** Revised rules for credit ABS information registration took effect in December 2025, optimizing processes and enhancing data standardization. Throughout the year, 249 credit ABS products were registered.
3. **Slower Green ABS Issuance Amid Deepening Innovation** Green ABS issuance slowed to 181.98 billion yuan, down 11.52%. Innovation continued with deals like the first private green tech innovation ABS (backed by EV battery rents), the first steel industry quasi-REITs (green+tech), and the first data center green holding-type property ABS.
**Market Development Recommendations**
To achieve steady ABS market development during the "15th Five-Year Plan" period, focus should be on the "Five Key Financial Tasks," optimizing new issuances, stabilizing existing stock, serving the real economy, and supporting key sectors.
1. **Optimize New Issuances for High-Quality Economic Development** * Enrich underlying assets aligned with key tasks, encouraging ABS for tech/green credit, intellectual property, and eco-asset loans. Promote multi-label products. * Broaden issuer base by easing access for smaller/regional institutions and fintech platforms. Explore multi-originator ABS and "special mention loan" securitization. * Encourage innovation in holding-type property ABS for new infrastructure (data centers, AI), affordable rental housing, and new energy, addressing liquidity and valuation challenges.
2. **Expand Scale and Improve Quality to Fully Utilize Market Functions** * Enhance the counter-cyclical role of NPL ABS, increasing issuance to improve disposal efficiency. Encourage AMC participation and broader asset scope. * Promote sound development of consumer finance ABS to boost consumption. Support diverse issuers and innovative products like green appliance ABS. * Improve data services and market transparency via unified standards and data sharing. Leverage blockchain, AI, etc., for efficient asset pricing and risk management.
3. **Implement Multiple Measures for Long-Term Stable Development** * Promote the "Simple, Transparent, and Comparable" (STC) standard with detailed implementation rules and third-party assessments. * Explore building standard asset pools, starting with residential mortgages, to facilitate securitization for smaller institutions. * Refine credit assessment and tax systems. Calculate securitized assets back for bank incentives. Optimize taxes to avoid double taxation and ensure uniform regional standards.
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