Credit Asset Securitization Risks Isolating Legal Research

The Asset-Backed Securitization (hereinafter referred to as ABS) refers to the conversion of original financial assets (such as security interest) into negotiable securitized interest backed by these financial assets. By way of the aforesaid conversion, the originator of ABS will be paid with value of high quality ( e.g. cash ) and investors of asset-backed securities will be paid with steady and constant cash flow.This essay is expected to raise some useful suggestions for ABS development of China by introducing and analyzing both U.S and China's ABS legal system and practice.This essay includes the following parts:This first part is to generally introduce ABS by mainly discussing the conception, economic function and operation practice of ABS.The second part is to introduce risk segregation. The first topic under this part will be the concept of ABS and its legal significance. The topics that follow will focus on two wings of risk segregation: the first wing is SPV's legal significance in risk segregation;the second wing is the relation between true sale and risk segregation.Following research roadmap set in second part, the third part will focus on the discussion of SPV's legal significance in risk segregation, which will be further subdivided into two topics: The first is the relation between SPV and originator, mainly discussing the risk of substantial consolidation;the second risk is bankruptcy risk of SPV itself.The forth part is about true sale. True sale, a legal concept in U.S law, will isolate ABS transaction from being recharacterised by U.S court as being secured loans and consequently being consolidated into originator's bankruptcy estate. The methodology of case law study and comparative law study will be adopted in the analysis of this part.