The Application Of Corporate Asset-Backed Securitization In China In Open Conditions

Asset-Backed Securitization (ABS) is no longer a new concept, but Corporate Asset-Backed Securitization (CABS) formed by application of ABS as a financing tool in corporate, actually, is a temporary new issue. CABS is different from the traditional sense of Credit Asset-Backed Securitization, and attracting the attentions of scholars in the fields of world economic and financial."The Corporate Specialized Asset management plan"launched by investment banker is the attempt of real CABS in our country. With the first launch of"GuanShen Highway Yield-Power Special Asset Management Plan" and "China Unicom's CDMA network rental receipts plan ", a series of corporate special assets management plans have implemented, it can be said that CABS practice has been walked in the forefront of the theoretical study.This paper chose a perspective of ABS as a new financing tool for enterprise, fully absorb the ABS research results in open conditions, combine the reality of China, and do theoretical study of CABS. This will help the management formulate the related laws and regulations and to play a guiding role in CABS practice which will be better applied. After defining the concept of CABS, this paper reviewed the progress in theoretical research on ABS, explained enterprises should follow the basic principles in lunching the ABS, and analyzed under which conditions an enterprise should choose ABS as a financing tool. Then this paper analyzed the existing issues of lunching CABS in China and proposed policy recommendations. Finally, we give a prospect of developing CABS in China. I.The main points of this dissertationFirst, the awareness of ABS. ABS is a credit mechanism, and the process of securitization leads public capital markets to replace the inefficient and high cost financial intermediation. ABS is a financing process as to enterprises, is a financing technique as to investment bankers, and from the development of the entire financial sector, which is an innovative system. The research of ABS has been preliminary analyzed the characteristics of the securities, the impact of external factors and empirical studies, gradually beginning to use a new theory of financial economics and new method to analyze the internal motivation of ABS and other essential aspects. Asset-Backed Securitization enterprises, the main driving force included that it is a low-cost financing tool, can enhance the mobility of corporate assets, and achieve a better distribution of risk and return.Secondly, the unique transaction structure of CABS. The main point of CABS is its transaction structure, that is, the security is how to be issued by the participating and in which kind of transaction system. Different from the "trust system" in the Corporate Special Assets Management Plan, the assets in the CABS transaction structure will be wrapped up and "true sale" to the Special Purpose Vehicle (SPV), then SPV issue asset-backed securities to investors. "True sale" will help to maximize the protection of the interests of investors, and guarding against the risk of default. Choice tenets of the basic assets, principles of reorganizing basic assets, principles of risk isolation and principles of increasing credit level in the transaction structure, are also mainly concerned in this paper.Third, the re-classification and options of financing tools. CABS is different from traditional corporate equity financing and debt financing tool. After it comes, there is a new classification of corporate financing tools. According to the ownership relationship formatted on the process of corporate financing, CABS financing tool is independent to equity financing and debt financing tool. According to the funds direction on the process of financing, CABS can be demarcated into external financing tool. According to financial intermediaries whether are involved in financing process, CABS is a third credit system which unlike traditional indirect financing and direct financing, and it's the direction of indirect financing.CABS is the isolated asset which can stably generate cash in the future, and the credit is based on the securitized asset, not the whole asset of corporate. Asset securitization can not only optimally collocate the existing stock asset, but also provide incremental funds without increasing the total asset or debt. Meanwhile, the special transaction structure and techniques can realize the bankruptcy -remote between the investor and the corporate, meet the demand of financing and investing largely, and realize the optimal collocate of resource. Therefore, there is distinct difference among asset securitization financing, equity financing and debt financing in credit basis, financing cost and risk, financing efficiency, the benefit source of investor, restriction to corporate and applied conditions. Also, CABS has been the third prevalent corporate financing manner in the world capital market.Research shows that considering only the risks and costs of financing, the enterprise will follow the following financing orders: retained earnings, commercial credit, interest transactions financing, CABS, bank loans, stocks, and corporate bonds. In normal circumstances, in addition to retained earnings and commercial credit financing, external financing will still follow the Myers pecking order theories: bank loans, stocks, bonds or securities with the right to option, secured financing, and CABS financing.Fourth, the problems and prospects to develop CABS in China. If try to development from the special asset management plan to the real meaning CABS financing manner in China, in the fields of law, tax credit ratings certain problems still exist in such areas. In legal terms, there are the main legal deficiencies in regulating the market, the establishment of SPV conflict with the "Company Law", and how to achieve "true sales", and so on. In terms of taxation, there are the problems of how to confirm income tax of financing receipts on the process of CABS, business tax and stamp duty on the process of transferring assets. In terms of improving the credit, there is the issue of how to achieve credit enhancements. We believe that only give full consideration to the interests of parties involved in CABS and establish the CABS legal system, CABS can develop more quickly. CABS as a new financing tool, due to its special credit basis, will be widely used by Small-Middle-Enterprises which usually finance more difficult. Due to the diversity of assets, CABS can be widely used, including infrastructure projects and car rental and whatever other assets that can be able to generate stable and receivables cash flow.II.innovations in this thesisFirst, the research angle is innovative.Once mentions ABS, people will equate it to credit ABS. The research to ABS has been the main stay of the securitization of credit assets. This paper will extend research angle to discuss the CABS issues. Along with the development of ABS, the assets of securitization are far beyond the original scope of the credit assets to "can be expected to have the cash flow stability" of enterprise assets. The biggest difference between credit ABS and corporate ABS is the target assets: The former is the expected future yield of the project, while the later is a credit assets or stock of existing assets. ABS is a financing instrument. When credit assets transfer to the business assets, ABS provides an alternative financing channel in addition to the traditional financing manner including bank loans, issuing shares or bonds, and so on. Although there is no condition to issue stock or bonds, those enterprises that possess "can be expected to have the cash flow stability" assets can finance through CABS. Research CABS has a great significance.The same as credit ABS, CABS also has its special transaction structure. Through this paper's research, we will make transaction structures of CABS, the options of enterprises financing instruments, and the existing problems and countermeasures of CABS more clear. In terms of policy, we will be able to provide a basis for management to formulate relevant laws and regulations. In terms of operation, we will be able to provide guidance for enterprises using CABS as a financing instrument on a particular legal environment.Second, the paper's main points.1, in an open condition, the research results of credit ABS can be used in CABS. Unlike traditional credit ABS, corporate ABS is a new financing tool. It broadens the financing channels for enterprises, so that more companies will be able to break through the traditional mode of financing for the restricted access to a lower cost of capital market financing. 2, CABS is the advanced form of the special asset management plans. It has its own particular transaction structure and can effectively protect the interests of investors. 3, CABS is independent to equity financing and debt financing, and it is a third credit system which unlike traditional indirect financing and direct financing, and it's the direction of indirect financing. 4, in normal circumstances, external financing will still follow this order: bank loans, stocks, bonds or securities with the right to option, secured financing, and CABS financing. 5, at present, to launch a genuine sense of CABS, there is accounting and taxation problems to deal with in our country. We should build financing laws and regulations that meet CABS at once. 6, CABS has its own characteristics of special credit basis, low finance costs and high financing efficiency and it will make application in various fields.