Page 343 - 2019 6th AFIS & ASMMA

» Moderator | Henny Sender » Panelist | Jerry Fang
Thank you. And applying that model to emerging markets, what Senior Director, Structured Finance Ratings, S&P Global Ratings
emerge markets might learn from the French structure?
Sure, thanks. Before that, may I briefly introduce myself? I started
as a rating analyst in 2001, and since then as the primary analyst, I was
» Panelist | Olivier Hassler responsible for the first rated RMBS in Taiwan. Then moved to Hong
Besides try to mobilize savings from the market and not just from Kong, I was involved in the Hong Kong RMBS sponsored by Hong
deposits, which is absolutely necessary, but with some risk involved. Kong Mortgage Corporation. When I was in Hong Kong, I also covered
Another benefit of the system is to structure the market and set the the Korean cross-border market. So, I was the primary analyst for a few
quality standards. So, it's a non-regulatory way, but you know that better Korean cross-border RMBS transactions before the financial crisis; for
than me, because that's what the Korean Housing Finance Corporation example, those transactions sponsored by Kookmin Bank, Citibank, Session II
does. It selects good quality mortgages only, which makes the market a city corporation, and Standard Chartered First Bank. Then I had a
sustainable. That's a very important benefit. The third thing I would chance to leave S&P and work with a Chinese bank Huawei in Shenzhen.
say is a need of fixed-interest rate mortgages, because when you lend to Although I left the rating agency, I had a chance to live and breathe in
lower-income people or lower middle income segments, these people Shenzhen and learned firsthand observations from Shenzhen for the
don't have a cushion to face and withstand interest rate hikes. I know Chinese community. When I rejoined S&P in 2015 again, I'm back
that's what happened in India and Pakistan, when the floating rate to cover the China and Hong Kong RMBS mortgage market and was
went up, so did delinquency rates. So, fixed interest rate at least for five, recently assigned to rate the Covered Bonds issued by KHFC.
six, seven years, maybe not twenty, is very important, precisely for the
affordable segment. But it's not manageable if it is based on deposits, So, in the past almost 20 years, my specialty and my knowledge
because deposits are very liquid; if you have a liquidity issue, you have covered all the asset types of mainly the RMBS in housing finance
to borrow short-term, which means variable rates. So, the big benefits of market. So, I'd like to take this chance to share knowledge and my
this institution is to introduce and develop fixed-rate mortgage lending observations on China. I will keep it short first and then we can follow
in the system. up to see what else to discuss. I think in terms of the housing financing,
in terms of the secondary market, for example, mortgage backed
transaction, either RMBS or mortgage-backed covered bonds, China just
» Moderator | Henny Sender recently developed the market. All of your country maybe developing
Thank you. Jerry, I'm going to turn to you now. You and I have spent this market for 20 to 30 years, but China just seriously developed the
a large part of our lives living in Hong Kong, watching the emergence of mortgage market over the past ten years. And they just started to issue
China. A lot of emerging markets have looked on China as a role model. lots of RMBS in the past two to three years. Although they develop
Tell us about how you've seen the development of China; you know much later than most of the countries, I think the good thing is that they
it's been so fast. And they've gone to embrace a quasi-market system. learn from the lessons observed from other markets. I'd like to share
Tell us about the development of the housing market and the financing two things with you. One is the risk retention. Because we see some
arrangements behind it. experiences that are observed in the global financial crisis, there is the
risk retention, just to ensure the originator has the skin in the game. This
is really important. In the past, when some bankers mentioned some

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