China Halts Data-Asset ABS Amid Local Debt Concerns

Chinese regulators have temporarily halted data-asset ABS, a form of asset-backed financing tied to corporate data, due to concerns that local-government financing vehicles (LGFVs) are using these products to disguise debt. The suspension affects both new filings and approved projects awaiting final approval. This move follows a surge in issuance and applications driven by LGFVs seeking alternative fundraising avenues amid tighter restrictions on local-government borrowing. China’s data-asset financing boom can be traced back to accounting changes in January 2024. Since then, financial institutions and local financing platforms have explored data-asset pledge loans, credit enhancement, equity financing, and data-asset ABS. The…