China's securitization surge scrutinized

Concern has increased that China’s booming securitization market will pose a risk to the financial system, The Wall Street Journal reported, citing Dealogic. Sales of asset-backed bonds so far this year have jumped to US$19.7 billion (RMB121 billion), up from $3 billion for all of 2013, according to the data-tracking company. Asset securitization provides businesses with an additional channel of credit as banks have become increasingly selective about lending, and are looking to clean up their balance sheets. However, some analysts are concerned about whether borrowers of the underlying securities will fully pay back the loans on time.