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Firm Served ICBC First Credit ABS 2007-10-15

  On October 11, 2007, the ICBC GongYuan Credit Assets Backed Securities 2007-1 has been successfully issued in the intra-bank bond market through book-building model.
  Zhong Lun Law Firm (“Zhong Lun”) is the only law firm serving this project. Zhong Lun’s team includes Zhang Xue-bing, Liu Bo-rong, Huo Wei, Tian Zhi-gang, Long Hai-tao, Yang Yan-ni, Li Ke and Cai Zhi-jie. Retained by Industrial and Commercial Bank of China (the Originator and Settlor, “ICBC”), Huabao Trust Co., Ltd (the Trustee and Issuer, “Huabao”) and CITIC Securities Co., Ltd (the Lead Underwriter and Bookrunner, “CITICS”), 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.
  The project is widely viewed as a mile stone of the Bank’s new direction of strategic development. With this project for the first time Class A is further divided into two categories, Class A1, a pay-through ABS, which is paid according to a fixed schedule with fixed rate, and Class A2, a pass-through ABS which is paid in floating rates designed to be a buffer shielding the risk of prepayment of the underlying assets. In addition, the ICBC acting as the originator has also provided external liquidity support through a special beneficiary trust to meet the requirement of the liquidity support reserve account mechanism.
  This ABS project is structured as follows: ICBC, 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 CITICS, which also serves as the bookrunner for the issuance. Huabao (the trustee) has retains ICBC to provide assets management service and China Construction Bank (as the custodian of trust account) to hold the revenue generated from the underlying assets. Hongkong and Shanghai Banking Corporation Limited is the project counsel. Standard Chartered Bank (HK) Ltd. is the deal arranger’s counsel. Ernst & Young is the accountant, and China Lianhe Credit Rating Co., Ltd is the rating agency for the project.
  The total volume of the GongYuan Credit Assets Backed Securities 2007-1 is RMB 4,021 million. The deal has three tranches: Class A (82.07%), Class B (12.31%) and High Profits Class (5.62%). Class A is divided into Class A1 (52.23%) and Class A2 (29.84%).  Classes A1, A2 and B are issued through the book-building model and well received at the open market among investors resulting in over subscription of 140%, 224% and 103% respectively.
  ICBC is the world's biggest bank in term of market value among the leading banks of the world.
  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.