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Asset Securitization: Theory and Practice by JOSEPH C. HU

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Chapter 15

Asset Securitization in Asia-Pacific

Imitation is the sincerest form of flattery.1 For the U.S. asset securitization market, it is an ultimate compliment in the volume and speed with which advanced and emerging capital markets adopted this financing method. European countries started to pattern after the innovative financing technique of asset securitization in the late 1980s. In the meantime, Japan and Australia in Asia-Pacific also practiced in earnest asset securitization as a creative means to satisfy the financing needs of consumers and businesses. The asset securitization products also satisfied the investor demands for a variety of innovative investment instruments. This chapter will provide a brief review of the asset securitization markets in Japan, Australia, Taiwan, and China.2

Asset Securitization in Japan

Market Growth with Variety of Underlying Assets

Japan started to develop its asset securitization market in the early 1990s. However, transaction activity had been lackluster with sporadic issuance of asset-backed securities. It was not until 1997 that the Japanese securitization market finally gained speed with a sharp increase in the issuance of asset-backed securities that amounted to ¥700 billion (about $6 billion at the then prevailing foreign exchange rate). It is interesting to note that, unlike the U.S. experience, asset securitization in Japan did not take off with residential mortgages being the first underlying assets. Rather, the bulk of the ...

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