Fitch expects growing Chinese CDO issuance

Fitch Ratings said it expects more issuance of collateralised debt obligations (CDOs) from China in 2006, following the launch of the country’s first officially recognised CDO in December 2005.

The deal was a collateralised loan obligation (CLO) originated by the China Development Bank with a portfolio size of 4.2 billion renminbi ($500 million). It was a cashflow balance sheet securitisation with 29 obligors in the pool, which are mainly large Chinese corporates, with investor interest coming from Chinese institutions.

Charles Chang, Fitch’s Hong Kong-based director of structured credit for the Asia-Pacific, believes there are many opportunities for CDO issuance in China, as there is

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