New demand could boost securitization market, Fitch says

The nation's securitization market may triple in three years amid a growing appetite for structured-finance products that yield more than savings and bonds, Fitch Ratings said.

Rapid growth is possible if the government "can simplify the approval process," said Charles Chang (張積豪), director of Fitch's Asia-Pacific structured-credit team, in an interview in Taipei during a Fitch seminar on structured finance.

Changes urged

He urged the financial regulator to make approving new issues easier than the current case-by-case review.

The securitization market, including chiefly asset-backed securities and collateralized debt obligation products, totaled about US$4.3 billion last year, Chang said.

Collateralized debt issues alone are on pace to double last year's total of US$1 billion, he said.

Securitized products expected to be popular this year include those backed by trade receivables, auto loans and equipment leases, as well as real estate investment trusts (REITs).

Fubon Financial Holding Co (富邦金控), Taiwan's third-largest financial services company by market value, announced plans for a REIT in October that it estimated would yield as much as 4.5 percent annually.

Comparison

That estimate compares with the 1.81 percent return yesterday on benchmark 10-year government bonds maturing in September 2015, according to the GRETAI securities market, the nation's biggest exchange for bonds.

Local insurers and banks have abundant cash on hand, especially as domestic insurers can use no more than 35 percent of their available funds for overseas investment, Chang said.