Our Accounts Receivable Securitization Use

The real economy had suffered an unprecedented loss due to the bursting out of theworld financial crisis in2007. The former pressure merely on the funds transferred tobigger pressure on inflationary along with the expending of the industrial chain. Thisphenomenon causes the numerous enterprises have a high accounts receivable andinadequacy current assets as well as the increasing pressure on manufacture (production).Due to the high accounts receivable reasons, the extravagant overstocked products result inexcess capacity; the rising of the non-performing assets leads to the growth of propertydepreciation preparation, so that lower the standard of the company earning capacity andvalue. Meanwhile, the stock market also suffered from the crisis, the stock-index sustainedgoing low and market confidence had been attacked. It weakened the motivation ofconsumption and investment on the whole market, reinforce the damage on the financialcrisis. Thus, under such circumstances, which the uncertainty of the current economy andrebound is not stable yet, this paper point out that china should apply structured financingtools to accelerate the securitization on accounts receivable.The theory of assets securitization spread to china in1980s. In recent decades, thetheory had been put into practice. Until now, china had some achievements on assetssecuritization. And, accounts receivable is the comparatively successful securitizationmethod; can bear the test of practice. The selected case in this paper is ABS bonds issuedby China Netcom, it is the most typical case among accounts receivable securitization.According to the current situation in China, this paper structured a research frameworkon accounts receivable securitization from the practice aspect. Meanwhile, this paper alsofocuses on analyzing the selection of transaction structure, credit arrangement and therisk of isolation, etc. We hope it may offer demonstrate effect and experiences on furtherdevelopment of China accounts receivable securitization.