Tactics Research On The Development Of Asset Securtization (ABS) In China

Asset securitization, one of the most important financial innovation since 1960's in the international financial circles, has been starting on swift expansion to every western country and some outstanding developing countries from its birthday. However, in China, asset securitization is still in the theory research stage and absorbed many economists in it According to many new civil achievements , this thesis focuses on ABS and gives a clear exposition of its features, function and the strategic significance to the economic development of China. Besides, tactics on the development of ABS are provided in the final part of this thesis.The meaning of asset securitization is explained differently from different angles. From the angle of its narrow sense, asset securitization is the process in which assets lacking mobility but owning expectable cash receipts change into securities that can be bought and sold freely in the capital market. Because of this, asset secuntization is often called: the second grade securitization". However, from its broad sense, asset secuntizanon also includes the traditional forms such as stocks and bonds which belong to "the first grade secuntization." The object of the thesis is the second grade secuntization.The basic carrier of asset securitization is asset-backed secunty(ABS) which can be divided into two categories: the narrow sense one and the broad sense one. The broad sense category includes three basic forms: Pass-through security, asset-backed bond,pay-through secunty ;two derivative forms: collateralised mortgage obligation(CMO) and strips. ABS in its narrow sense category only indicates pass-through security which means that the ownership of the secuntized assets is truly sold to the special purpose vehicle (SPV) and disappear from the balance sheet of the onginator, and moreover the funds for paving principal and interest completely come from the secuntized assets. Because pass-through secunty is the main earner of asset secuntization, it becomes naturally the core of the thesis.Asset secuntization builds a stnct and effective trade construction to ensure the success of the financial transaction .The main parts of asset secuntization includes originator, servicer ,SPV, issuer, rating organization ,credit enhancement institution, trustee bank ,original debtor and investors. The secuntized asset usually possess features like these: owning stable cash receipts in the future, obtaining certain credit rate and repayment term or condition easy to handle. The process of asset securitization is generally listed as the follows: At the beginning the object assets for securitization are defined and put in the Pool by the originator. Then the assets are truly sold by the originator and get credit enhancement After that the asset-backed securities which will be bought by investors and issued by a investment bank.. Next, me income from sales is put back to the Pool and will be paid to the originator, meanwhile, the originator becomes the sevicer who takes the responsibility for supervising the original debtor to pay its debts into the pool on time. Finally, SPV will distribute the assets in the Pool between every main pans of the trade, the investors will get principal and interest of the secunties, the intermediate agencies will obtain brokerage, the rest will be paid back to the originator.Owing to possessing the ments which wake it different from all old financial forms, such as: income determinant, no nght of recourse, constructive, financing off balancesheet and low cost, asset secutitization gains fairly high estimation in the international financial circle. However, its complexity also bring corresponding nsks, so it is necessary to abide by strict regulations in case.Asset secuntization is the inevitable outcome of the development of the market economy. In the opinion of this thesis, China will develop it sooner or late and the sooner, the better. Development of asset secuntization will expand the range and the scale of the capital market of which function will...