Mashang Consumer Finance issues US$240m in ABS

Chongqing-based Mashang Consumer Finance Co Ltd announced the issuance of its first asset-backed securities (ABS) product this year, worth over 1.7 billion yuan (US$240 million), on Tuesday.

Placed in the national inter-bank bond market, the securities have already been acquired by several banks, securities brokers, fund managers and other financial institutions. The nominal interest rate of securities in senior tranche A stood at only 3.5 percent, a new low this year for the consumer finance sector, the firm said.

Assets in this issuance are all scenarios-based financial products, among which digital products account for 62 percent of total loan value.

Of note, loans pooled in the product are all of small-ticket size, with the average amount being 1,080 yuan for a total of 1.72 million contracts. As for clients, most are aged between 22 and 30, an age segment usually having higher solvency.

Zhao Guoqing, founder and CEO of Mashang Consumer Finance, said that the upward trend of China's consumer finance industry will not be affected by the coronavirus epidemic in the long run and the sector will continue to play a major role in driving domestic demand.

The company has established a data-driven and intelligent risk management system in an attempt to achieve automated, real-time, and adaptive risk control. To optimize the quality of the underlying assets and deliver better returns for investors, it has introduced decision-making algorithms in designing and adjusting the ABS product.