S&P Global Ratings forecasts a subdued performance for China's structured finance market in 2025, with overall issuance to remain at 2 trillion yuan, according to a Thursday release.

Structured finance issuance volume grew 8% in 2024 to 2.03 trillion yuan, S&P said.

Sectors like consumer loan asset-backed securities (ABS) and micro and small enterprise loan ABS will expand, driven by projected strong growth in retail sales and diversified funding sources for issuers, S&P said.

However, residential mortgage-backed securities (RMBS) and auto loan ABS will likely see fewer issuances, the rating agency said.

The weak outlook for light vehicle sales, greater banking competition in auto loan financing, and a drop in national property sales will notably hit issuance in these historically dominant segments, according to S&P.

Meanwhile, S&P expects a flat performance for equipment lease ABS issuance, as a 4.1% GDP growth forecast in 2025 is balanced by a relatively flat manufacturing purchaser managers' index.

The rating agency expects collaterals to have a stable performance across its rated RMBS as well as the various ABS classes.