Applicability Of Asset-backed Securitization In High-speed Railway Construction

With China's sustained and rapid development, rail transportation has become an increasingly restricted factor of China's fast economic growth. So the Ministry of Railways has introduced the goal of constructing the large-scale high-speed railways into the long term railway network plan" in 2004.As there were some disadvantages in the traditional mode of financing of railway construction, if we hold on the way of past,it will be quite difficult to meet such a huge funding gap of the high-speed railway construction.So how to innovative financing models to attract more capital to participate in high-speed railway construction has been an important problem to be resolve.Asset securitization is an expected return of asset-oriented financing, since the birth of 60 years last century, after 30 years of rapid development, which now has been an important capital market financing in the United States extended to car sales loan, credit card receivables, fees and other fields of infrastructure.In recent years,experts and scholars also has done some research on the types of financing,which relates to the mortgage securitization,securitization of credit assets and infrastructure securitization. The method can bring asset lack of liquidity, but with future cash flows together, through the structural reorganization, changes into the securities for the sale in financial markets and achieves financial intermediation.And high-speed Railway project has characteristics poor liquidity, stability of future cash flow consistent with the conditions of the securitization. Therefore, the idea of securitization of assets applied to the financing of the construction of high-speed railway has important practical significance.According to the type of securitized assets, there are two, the MBS(Mortgage-Backed Securitization) and ABS(Asset-Backed Securitization).MBS assets is generally the basis of mortgage, which makes the lack of liquidity in the mortgage process to achieve flow through the issuance of mortgage-backed securities. ABS assets generally refers to a variety of other mortgage such as loans receivable, equipment rental fees, infrastructure fees based on asset securitization. The essence of ABS is to achieve financing by turn the cash flow produced by the underlying assets in the future into reality funds which can be available. Since this paper will study application of asset securitization financing in our high-speed rail project, so this article refers to ABS.Based on the above background, the paper start from the research of ABS(Asset-Backed Securitization)financing in domestic and overseas in high speed railway construction, putting forward a creative way to apply ABS to finance the construction of high-speed railway in China. Then,analysing the development of securitization of assets, including the meaning, operation, mechanism and the major participants, which has provided a theoretical basis for designing the ABS financing structure of high-speed railway later. In the core of the article, firstly I have analyzed the necessity of using ABS in high-speed railway construction basing on the current financing needs of high-speed railway and financing ways in China. Then I demonstate the feasibility of implementation of ABS in China, based on conditions of spply of high-speed rail way assets, the macro environment and market mechanism and the comparative advantages of ABS. Analysis the specificity of high-speed railway in the next, designing an ABS transaction structure of the high speed railway. Not only obtaining that as the core, the SPV should be a high-speed railway special purpose trust, but also inferring the current securitized assets in China should be based on EMU, high-speed railway lines, ticket incomes and well-run joint venture companies. Finally, a more comprehensive summary of the current main obstacles facing the ABS financing, and for some of these obstacles feasible coutermeasures.Innovation of this paper is through the analysis of asset condition of high-speed railways, and the contrast to ABS financing with other railway construction financing, concluding that ABS financing is feasibility in our high-speed railway construction.Meanwhile designing the corresponding transaction structure. The main deficiencies are that the extensive and comprehensive nature of study should be still to be improved because a wide range restrictions of the imperfect application theory and unwidely practice in the subject of asset securitization...