The Design Of Collateralized Bond Obligation Under The Credit Enhancement

The SME(small and medium-sized enterprise) is an important part of the economic system. But the problem of financing has restricted the development of SME. In order to solve this problem, the theorists and practice experts have made a great effort. CBO(collateralized bond obligation) is regarded as an effective method.Since 2007, china has issued 16 CBO bonds and more than 100 of SME have been funded in this way. However the development of CBO lagged behind in China. One reason is that the credit risk of SME is high. So credit enhancement is very important.This dissertation reviews the development of CBO in China, analyzes the deficiencies of CBO, and introduces Korea’s P-CBO(primary-collateralized bond obligation) mode,which is an innovation of ABS(asset-backed securitization). This mode combines external with internal credit enhancement, and then effectively solves the problem of financing constraint of SME in Korea. Finally, this dissertation tries to design a mode which is also an ABS production, combining privately placed bonds and SME collective bond.