A Case Study On The Risk Of Supply Chain Finance Asset Securitization

Against the backdrop of the implement of supply-side structural policies such as “cutting overcapacity,reducing excess inventory,deleveraging,lowering costs and strengthening areas of weakness”,supply chain finance market has developed rapidly in China in recent years.Supply chain finance provides relevant financial services for small and medium-sized enterprises in the supply chain by opening up the logistics,business flow,information flow and capital flow,which helps them find a newer and more convenience way to raise funds.On the other hand,the development of technology stimulates innovations of supply chain finance.For example,the combination of asset securitization and supply chain finance is one of the most potential innovations.Most of the products in China take real estate enterprises as the core enterprises in recent years.However,this type of programs started relatively late,and the mechanism still need to be improved.Transaction supervision needs to be improved,and there are still many potential risks in the process.Therefore,this thesis selects Evergrande Real Estate’s "CITIC Securities-Xinjie-Lianyirong No.2 Supply Chain Asset-backed Special Plan 6Phase 6" as the specific object,and analyzes the risk of this product through several aspects.Firstly,this thesis introduces the basic situation,transaction structure and underlying asset pool of the case.Secondly,the writer analyzes the motivation of Evergrande Real Estate to raise funds by using this kind of financing method.Thirdly,the article carries out risk identification and risk assessment for the program,deeply analyzing its potential risks.Fourthly,in order to make more specific analysis,this thesis provides a quantitative analysis for one of the most important risk factors faced by supply chain finance asset securitization-the core enterprise credit risk.The analysis is based on Z-Score model and KMV model.Fifthly,according to the existing main risk management measures of the product,the overall situation of its risk management is evaluated.Finally,combined with all relevant information of the case,this thesis puts forward relevant suggestions on the risk prevention of supply chain finance asset securitization and then makes a simple conclusion.After a detailed interpretation,this thesis conducts a comprehensive analysis of the credit risks,underlying asset related risks,operational risks and market risks that may occur in the process of the program.And this thesis emphasizes the importance of reducing the risk of supply chain finance asset securitization from various aspects.To a certain extent,this case study can provide some original ideas for SMEs who need to raise money.Moreover,it can also provide some practical suggestions for more related industries who want to develop similar programs.