Case Analysis Of PPP Assets Securitization

With the further advancement of urbanization in China,the government and residents have higher requirements for urban sewage treatment services.Therefore,huge capital needs have been generated in the construction of related fields.The fundraising of these projects in the past mainly relied on the financial expenditures of local governments,which brought huge debt pressure to local governments.In order to reduce the government debt burden,China began to vigorously promote the development of the PPP model at the end of 2013.However,the large demand for funds and the long financing cycle of PPP projects have caused many PPP projects to face financing difficulties,which has affected the landing rate of PPP projects.The combination of asset securitization and PPP can revitalize stock assets,further mobilize social capital,and help solve the financing problems of PPP projects.Since December 2016,the National Development and Reform Commission and the Ministry of Finance have successively issued policies to guide and support the landing of PPP asset securitization projects.The official landing of the first batch of four single PPP asset securitization projects in 2017 marked the beginning of the practice of PPP asset securitization in China.This article selected the Humen Luyuan PPP asset securitization project,one of the first batch of four single PPP asset securitization projects in China,for in-depth analysis.Firstly,the development status of PPP asset securitization in China is summarized from two aspects:market overview and project characteristics.Next,the method of case analysis was used to briefly introduce the various aspects of the Humen Lvyuan PPP asset securitization project from the aspects of issuance background,basic assets and cash flow,structural design,credit enhancement measures and risk isolation measures.Then,using comparative analysis method focusing on the advantages and shortcomings of the project are analyzed,and it is concluded that this project is with steady cash flow,financing costs,credit enhancement measures abundant in advance,etc,and has yet to achieve the bankruptcy isolation,lack of liquidityand low yields,reduced self sustaining subprime securities financing effect,a single source of underlying assets and credit rating agencies such as single remains to be perfect.Finally,it puts forward suggestions to improve the development of China's PPP asset securitization from the aspects of improving project bankruptcy isolation and financing,improving project liquidity and yield,reducing the risk of basic assets,and enhancing the authoritativeness of rating results.Among them,it is innovative to propose an independent information disclosure platform for PPP asset-backed securities for liquidity issues,and to reduce the proportion of self-sustained subordinated securities of the original equity holders in order to improve the effectiveness of financing.