China plans to widen corporate financing channels

China is considering allowing domestic firms outside the financial sector to securitize their assets, opening up a new means of financing for such firms, The Wall Street Journal reported, citing sources familiar with the situation. The state-backed National Association of Financial Market Institutional Investors (NAFMII) submitted a draft of the rules to interbank bond underwriters, requesting feedback on asset-backed medium-term notes (ABNs), the suggested securitized product. According to the draft rules, ABNs should be backed by financially sound assets or property rights, and can be issued via public offerings or private placements following registration with NAFMII. The plan would allow for more efficient allocation of financial resources, but investor response to ABNs may be poor because of the economic slowdown in China, said Zhang Xu, an analyst at Minsheng Royal Fund Management.