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Firm Served First Credit ABS Originated by Shanghai Pudong Development Bank 2007-09-14

  On September 11, 2007, the PuFa Credit Assets Backed Securities 2007-1 has been successfully issued in the intra-bank bond market through book-building model.
  Zhong Lun is the only law firm serving this project. Zhong Lun’s team includes Zhang Xue-bing, Liu Bo-rong, Huo Wei, Yang Wan-tao, Tian Zhi-gang, Long Hai-tao, Yang Yan-ni, Li Ke, Cai Zhijie and Ren Wen-xia. Retained by Shanghai Pudong Development Bank (the Originator and Settlor, “SPDB”), Huabao Trust Co., Ltd (the Trustee and Issuer, “Huabao”) and Guotai Junan Securities (the Lead Underwriter and Bookrunner, “Guotai”), Zhong Lun provided comprehensive services from design of deal structure, legal due diligence over the underlying assets, drafting legal documents, issuance of legal opinions,legal attestation of ABS issue through book-building, and counseling on other relevant legal matters.
  This issuance is a land-breaking success in several ways: the first issue of credit assets backed securities in the second stage of ABS Securitization Pilot Program in China, the bank is the first issuer of ABS among commercial banks formed as a stock company, and the lead underwriter subscribes all securities and commits to complete sales. In addition, for enhancing liquidity of the product, SPDB for the first time proposes funding arrangement through pledge of ABS, which is a new invention of systems in the market.
  This ABS project is structured as follows: SPDB, as the originator and the settlor, creates a special purpose trust and transfers its credit assets to Huabao. Huabao issues the ABS to institution investors and distributes cash flow revenue from the entrusted assets for repayment of principal and payment of interest and other benefit of the ABS. The ABS was underwritten by the syndicated underwriters led by Guotai, which also serves as the bookrunner for the issuance. Huabao (the trustee) has retains SPDB to provide assets management service and CITIC Banking Co. Ltd (as the custodian of trust account) to hold the revenue generated from the underlying assets. Ctigroup Global Finance (Asia) Ltd is the financial counsel. Ernst & Young is the accountant, and China Lianhe Credit Rating Co., Ltd is the rating agency for the project.
  The volume of the PuFa Credit Assets Backed Securities 2007-1 is RMB 4,383 million. The deal had four tranches: Class A (83%), Class B (7.8%), Class C (5.7%) and Subordinate Class (3.5%). Classes A, B and C are issued through the book-building model and well received at the open market by investors resulting in over subscription of 140%, 123% and 108% respectively.
  Currently Zhong Lun has been retained as counsel for several ABS projects, and the firm’s team is working on them smoothly as scheduled for introducing more securitization products to China’s financial markets.