Analysis On Credit Enhancement Of Corporate Asset Securitization

Asset securitization can be traced back to the United States in the 20 th century. The fastest-developing real estate subprime mortgage has boosted the rapid growth of world economy when being widely applied to the financing of international capital market as an important innovative financing instrument in the international capital market of the 20 th century. Different from ordinary financing means, asset securitization plays a vital role in various aspects like improvement of asset fluidity and realization of off-balance-sheet financing by dint of its quick financing structure. At the beginning, asset securitization mainly included securitization of credit assets, securitization of non-performing assets, and securitization of real assets(such as automobile loan and real estate loan) for different banks. Now, it has developed into an effective approach whereby different banks and financial institutes address the problem of non-performing assets. Due to China's immature market economic system and the inability to satisfy the requirements of asset securitization, the asset securitization of China started late. Not until 2005 did the exploration on the practices of asset securitization commence. After over a decade of development, asset securitization plays a role in diversifying financing instruments, exploiting the advantages of off-balance-sheet financing and facilitating the constant innovations of financial market. In the economic background of China's interest rate liberalization, the financing channels of small-and medium-sized enterprises which fail to be expanded in an all-round manner still have many shortcomings. As a result of this, asset securitization should be widely applied to the financing of small and medium-sized enterprises as an emerging innovative financing instrument to play a role in various aspects, such as reducing financing cost, turning stock assets into fluid assets through enhancement of asset fluidity, upgrading products, attracting investors, and ensuring the successful issuance of securitized products. In essence, the 2008 subprime crisis was triggered by the securitization of subprime assets that exerted an influence over the whole world. Thus, it can be seen that asset securitization plays a tremendous role in financing and fundraising. This crisis has also exposed the practical problems of asset securitization, such as underlying asset's lack of stability and fluidity, credit decline resulting from multiple packaging sales of securitized products, and unreliable credit rating result. The asset securitization, which emerged and began to develop dozens of years ago, has greatly promoted the development of world economy. Notwithstanding massive shortcomings, asset securitization cannot be completely abandoned because it also shows various advantages in terms of financing. Thus, the advantages of asset securitization should be fully exploited when its risks are prevented.In international society, there are many in-depth studies touching upon various aspects of asset securitization in combination with the comparative analysis on actual cases. However, China's pilot program on this aspect starts late and the securitized products issued are largely constituted by credit products. The focus of massive studies is the securitization of credit assets, and there are few studies about specific corporate asset management plan, particularly about credit enhancement of special asset management plan.Based on the enhancement credit of special corporate asset management plan,this paper applies the special asset management plan to the receivables of Minmentals Development Co.,Ltd by various methods,such as the integration of theories with practices and comparative analysis.A special study on credit enhancement is performed according to China's specific practices, and suggestions for the deficiencies of this case are proposed as well. As the first case study on the special plan of Minmentals Development Co., Ltd that takes trade receivables as the underlying asset pool, this paper has provided a new financing mode for enterprises with a large amount of receivables in China.