Alibaba’s financial affiliate Ant Financial has halted its practice of selling debt backed by consumer loans following the Chinese government’s crackdown on the micro-lending industry, Bloomberg reports. The company had raised billions of dollars through this method last year.
Ant has not sold any asset-backed securities since early December, according to research by Bloomberg and China Securitization Analytics, an abrupt shift given that the company issued a record $37 billion of these securities in 2017. The company’s move appears to have come days after authorities announced on December 1 that micro lenders would from then on be required to consolidate asset-backed securities into their balance sheets.
“Without the new rules, Ant Financial’s consumer loans would balloon with no limit because it can move most loans off its balance sheet by packaging them into ABS,” said Yang Junmin, an analyst at research firm Shanghai Yingxun Technology Co. “Now they would be very cautious about selling new ABS. Ant Financial’s new consumer loans may have an obvious slowdown this year.”