CITIC Pioneering Wastewater Treatment PPP Project Asset Securitization Risks And Countermeasures

With China’s economy entering the new normal,deleveraging,restructuring,and defusing various risks have become important elements of macroeconomic regulation.The unique advantages of PPP asset securitization have made this tool widely recognized by governments,enterprises,and investors.On December 21,2016,the National Development and Reform Commission and the China Securities Regulatory Commission jointly issued the "Notice on Promoting Asset-Backed Securitization of Government and Social Capital Cooperation(PPP)Projects in the Traditional Infrastructure Sector" to make the process of PPP asset-backed securitisation fast However,due to the short development time of PPP asset securitization,there are still many risks in the aspects of basic assets and asset securitization design.Therefore,strengthening the research on the risks and counte-rmeasures of PPP asset securitization appears to promote the development of PPP asset securitization.Particularly important.In this paper,the case of "CITIC’s first PPP project asset securitization" in the asset securitization of the first batch of PPP projects in China is selected as a case.The risk analysis method of the existing asset securitization is used to analyze the basic asset and asset securitization design.Risks in asset securitization projects.The research contents of this article are as follows: First,the research background and significance are introduced,and the research results of existing scholars are reviewed and summarized.Second,the definition and general process of asset securitization are introduced,and the theoretical basis of asset securitization of PPP projects is summarized.The development of PPP projects in China and the issuance of asset securitization of PPP projects are summarized.Then,the issuance background,financing motives,basic asset characteristics,participating entities,transaction structure and credit enhancement of CITIC’s first sewage treatment PPP project asset securitization aresuance.The measures and issuance profile are introduced;then,the risks in the asset securitization project are discussed from three aspects: basic assets,transaction structure and participating entities.The analysis results show that CITIC pioneered the securitization case of sewage treatment PPP project.There are basic asset quality risk,basic asset compliance risk,basic asset forecast cash flow risk,bankruptcy isolation risk,capital mixing and misappropriation risk,SPV bankruptcy risk,and credit rating risk,etc.Finally,for the risks that may exist in the project,this article Put forward five point project risk pairs Recommendations,including the proper operation of the project,the introduction of third-party asset services,enhance trust and increase external means,optimize the product structure,reduce debt and improve the proportion of secondary self-sustaining system design.In addition,this article also puts forward four policy implications based on research,including sound laws and regulations,reforming the review mechanism,improving the capital market mechanism,and establishing a full-process risk supervision system.