Research On Credit Enhancement Of Enterprise Asset Securitization In China

Given the situation that the credit enhancement has a key role in the process ofenterprise asset securitization, and the current research on this subject is relatively few,this article explore the credit enhancement in the process of asset securitization withthe case‘The special asset management plan of Happy Valley theme park admissioncertificate’.This project use four credit enhancement means including the excess yields cover,the balance payment commitment offered by the primary stakeholders, the guaranteeoffered by OCT, primary/secondary layered. This article introduce the backgroundand present situation of the program and these enhancement methods at first,and thenconduct the comparative analysis and triggering mechanism analysis afterthat.Through the analysis, we can find that the credit enhancement means can reducethe risk of the issued securities, and promote the launch.But at the same time, thereare some problems existing in these means, which including unreasonable design ofpriority/secondary layered,excessive reliance on internal credit enhancement, toohigh risk remained by the primary stakeholders, invalid risk isolation, too highfinancing cost and so on. This article also point out the root of these problems.Aimed at these problems, the article puts forward some improvements for the creditenhancement model of the project, including lower percentage of the yields, choosingappropriate balance payment commitments and guarantor, optimizing the structure of"priority/sub layers", intensifying the combination of different credit enhancement,seeking the balance between the cost, utility and risks, etc. At last, aiming at theseroots of the problems, this paper comes up with a series of suggestions for theimprovement of credit enhancement in the asset securitization, which not only includethe improvement of credit enhancement pattern itself, but also the improvement ofmacro-environment.