Credit Risk Analysis Of Governmental Financing Platform Class Customers

In 2006, China Development Bank (ab.CDB) lent 553.4 billion CNY to the industry of coal, electric power and oil, transportation, agriculture, communication and infrastructure, accounting for 78.6% of total loan amount. Meanwhile, CDB lent 212.5 billion CNY to the west and northeast of China.CDB, founded in 1994, constantly implements market-oriented development strategy and policy, aims to keep and develop international advanced marketing achievements, upgrades its core competition and achieves the objective of building up national power and improving the people's livelihood. The loans for governments, which are financing platforms, take an important part for CDB in supporting the regional economic development and get an important status in CDB while rise year after year. So it is vital for CDB to analyze the credit risk and construct an effective credit system of the platform clients along with the popularization of the platform loan mode in the regional construction.At present, the credit risks of government financing platform clients mainly represent three aspects. i.) The credit of platform clients basically depends on government, and so their credit risks are hard to calculate. They are usually subject to government finance department or development and reform commission. It is difficult to reflect their actual credit situation by usual analysis method. i.i.) The flat clients are lack of actual assets. As a result, their credit structure is hard to be constructed. Most of the principal parts of platform loans are city construction investment corporations, which are mainly organized for satisfying the conditions of city construction loans by administration means. Although their functions are enhanced by reorganization and operation in recent years, they are still affected heavily by government administration interventions. Now the status is that their operation assets are short while the total assets are much more. Furthermore, their financing channel is single and they are lack of hematogenic function themselves. Thereby, they do not have sufficient effective assets to be mortgaged or impawned when they accept loans from CDB. i.i.i.) The loans for platform clients can not be supervised instantaneously. It will lead to a big credit risks. For the platform clients are only borrowers, they will provide loans to the real loans users. It will bring on a blank for borrowers to supervise the loans to real users. The borrowers'responsibility is financing while the real users are only in charge of the constructions and operations of the project. The two parts could not supervise each other effectively. In fact, the borrowers become the second hand passers. At the mean while, the management of loans is very loose. The relationship of property right is not so clear; therefore the loans borrowers have excuses to pass the buck to others.Aiming at the credit risks of government platform clients, CDB should enhance risks construction and management as below.1. Perfect the credit evaluation method of the plating clients. This thesis figures out several means to solve this problem, such as increasing the weight of government credit when evaluating the credit situation of plating clients; emphasizing the effect of the importance of government credit, the cooperation with government and government subrogation to the government continuity; the artificial person status of projects; the relationship of government and artificial person of project; the management level of the city we stay; and the examination of the assets quality of city construction loans. CDB also need evaluate and conclude an integrate credit level of the platform clients by analyzing the credit consciousness and credit ability of government. At the same time, CDB should create a dynamic credit analysis for platform clients and anticipate their credit development to promote their credit constructions.2. Enhance the structure management of government financing platform clients. For this kind of clients usually have such management problems as few managers, little assets, and no cash flow and weak ability to resist risks, etc., CDB could specify the platform's function and the artificial persons' qualification, perfect the assets structure and increase the cash flow to let the platform corporations have independent artificial person qualifications and stable capital resources to return the loans. Furthermore, it could convert the loans returning ways of platform clients from simply government allowance to market operation. To realize a continual development, they should construct themselves credit and profits. And so, it could increase the financing, investing and repaying ability of platform clients.3. Consummate the credit management for custom of the platform. Owning to separating between the borrower and user, financial management is so simpleness, and the borrowers do not implement responsibility. So we must control strictly and deduce the risk. The examination process of custom's credit, it aims to firstly choice the social benefit project. We will construct the credit structure and carry out the hypothecation. Via the platform, we will focus on the situation of cash flowing, find timely the risk and prepare the safeguard.