Micro-Lenders Under JD.com, ByteDance, Meituan and Others Accelerate ABS Issuance

On October 14, the Shanghai Stock Exchange approved asset-backed securities with a total amount of 3 billion yuan ($412.7 million), issued by a micro loan subsidiary of leading Chinese e-commerce company JD.com. This is the third batch of ABSs applied for by the micro lender this year, and all three applications have been approved by the stock exchange, with a total amount of 11.39 billion yuan.

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ABSs are an important financing method for micro-lenders because of their low issuance threshold, low cost andrevolving periods. “In the past year and the first half of this year, affected by factors such as the special rectification launched by the government targeting Internet platforms, the issuance of ABS by consumer Internet companies was suspended. The current market recovery was mainly driven by the centralized release of the backlog of leading companies after the issuance was restarted,” said Jin Tian, a senior researcher at the Institute of Digital Economy of Zhongnan University of Economics and Law.

According to data disclosed by the Shanghai Stock Exchange and the Shenzhen Stock Exchange, Jiemian News found that since the beginning of this year, micro-lenders under five Chinese internet giants, namely Tencent, ByteDance, Baidu, Meituan and JD.com, have been successfully approved to issue ABSs amounting to 39.33 billion yuan, and there are still ABSs with a total amount of 55 billion yuan to be issued while now in the feedback stage.

Among them, a micro-lender controlled by ByteDance has applied for the issuance of three ABSs, each of which is worth 10 billion yuan. They are in the feedback stage at present, and the latest reply time of one ABS applied for issuance at the Shanghai Stock Exchange is October 13.

This year, the largest amount of ABSs has been successfully issued for Meituan‘s micro-lender, which has issued 18 billion yuan, followed by JD.com‘s subsidiary, with an issue amount of 11.39 billion yuan. The third place is Baidu‘s fintech arm, with an issuance amount reaching 10 billion yuan.

Tencent‘s lender subsidiary has only applied for one ABS, and the amount to be issued is the smallest compared with other internet small loan companies, which is only 1 billion yuan. At present, this ABS has not been successfully issued in the feedback stage.

In addition, Trip.com and Qihoo 360 have one ABS, respectively, in application this year, which are still in the feedback stage.

In terms of underwriters, CICC and CITIC Securities are most favored by internet micro loan companies, and the number of ABSs underwritten by them accounts for more than 50% of the total. China Merchants Securities Asset Management has close cooperation with Meituan‘s micro-lending subsidiary. Of the five ABSs issued by Meituan this year, four are underwritten by the firm. According to CNABS (China asset-backed securities website), the top three underwriters of enterprise ABSs have been CITIC Securities, Ping An Securities and CICC in this year.

From the perspective of the whole micro-lending industry, on October 25, China’s central bank released a statistical data report on micro lending companies in the third quarter of 2022. By the end of September, there were 6,054 such companies in China. The loan balance was 907.6 billion yuan, a decrease of 34.7 billion yuan in the first three quarters. The number of employees is 58,467, and the paid-in capital is 770.9 billion yuan.

Yu Baicheng, Vice President of 01 Think Tank, pointed out that online micro-lenders mainly provide credit services for individual consumers and small and micro-sized enterprises. Under the background of urgent financial support for the real economy, the role of online micro-lenders needs to be further developed, so it is expected that financing channels such as ABSs will continue to be supported.