International Derivative Financial Products In China, Applied Research

Asset-Backed Securities (ABS) Mortgage-Backed Securities (MBS) are the fastest growing structure financial instrument of the global financial market. There are numerous products of ABS; many assets are securitized in US financial market. In 2004, ABS and MBS rated deals totaling $1.7 trillion dollars, which constituted over 7.5% of total Fixed Income market. In the one hand, with the dramatic growth of international commercial trading, foreign currency asset have grown significantly in recent years. Beside the simple derivative tools like: Option, Future, Swap, the more effective financial instrument is need to protect against investment risk for foreign currency asset. In the other hand, the first ABS product offered by CDB and the first MBS product offered by CCB are deliveries in the inter-bank bond market in China in December 2005. It represent that asset securitizing become realize in China financial market.Structure financial instrument includes Commercial mortgage-backed securities (CMBS),asset-backed securities (ABS),real estate investment trusts(REIT), and residential mortgage-backed securities(CMBS). According the research report of US, most of ABS and MBS is floating interest rate, and credit rate is AAA and duration is short term. Also, the structure of ABS and MBS are different with different client requirement of cash flow.For example, the case coded NC 2005-HE 4 of Credit Suisse First Boston is a good case. Offering amount is 400 million, and have 16 trenches and Cap and Swap in the structure. Even the design is comprehensive; client will have more structure to fit their requirement.In the past few years, as lack of professional staff and limitation of law...