Research On Social Capital Risks Of PPP Asset Securitization

With the introduction of the new budget law,local government financing platforms are strictly controlled,which limits the financing capacity of local governments.However,local governments still need funds for infrastructure construction.In this context,China promotes the development of Public Private Partnership(PPP)and hopes to introduce social capital to solve this problem.However,due to the long investment period,low return rate and large early investment of PPP,the interest of social capital in PPP is not high.The cash flow of basic assets of PPP projects is relatively stable.If PPP projects are combined with asset securitization,the liquidity of PPP projects can be increased and the exit channels of capital can be improved through asset securitization,thus PPP can develop healthily though attracted social capital.However,social capital still faces a series of risks in participating in asset securitization of PPP projects due to the short development of asset securitization of PPP projects in China and the lack of experience.By studying the risks faced by social capital in the asset securitization of PPP projects,on the one hand,this paper guides social capital to pay attention to risks and establishes corresponding risk prevention and control system,thus improving the success probability of PPP projects,On the other hand,from the perspective of social capital participants as risk research,combining the characteristics of social capital and PPP asset securitization,this paper enrich theoretical system of PPP asset securitization risk research.Firstly,This paper based on the theory of asset securitization and the role of social capital in the PPP and risk allocation of PPP,argues that the PPP project risk of asset securitization mainly derived from the underlying assets cash flow,bankruptcy isolation,credit enhancement and policy,social capital does not directly take risks by establishing project company,but the risks affect social capital through project companies;Secondly,This paper take the securitization of CFLD PPP project as an example,explains how the risks of asset securitization in PPP projects can be transmitted to social capital CFLD through the project companies,and put forward suggestions to guide other social capital to prevent the risks of asset securitization in PPP projects;Finally,the conclusion of this paper is as follows:(1)the risks of PPP asset securitization will affect social capital by project company,social capitalcould improve the quality of PPP asset securitization though focus on quality of PPP project and improve the design of asset securitization,(2)The risk of bankruptcy isolation and policy are difficult to avoid due to the limitation of objective conditions.Although social capital cannot play a leading role in the prevention and control of some risks in the asset securitization of PPP projects,the social capital can avoid risks as much as possible under the current conditions and improve the quality of PPP projects under the existing laws and regulations.