Research On The Financing Mode Of Private Debt Based On The Angle Of Credit Enhancement

May 2012, <SME private debt business pilot approach>was introduced,The Shanghai Stock Exchange and the Shenzhen Stock Exchange launched the SME private debt business,Chinese version of "junk bonds" produced formally. Traditionally, the financing model, rely on equity financing and bank loan have started to develop the bond market.For SMEs(Small and medium enterprises),they lack of transparency about information,have high borrowing costs and face the difficulty of civil financing.undoubtedly,Private debt business will have a lot of advantages,as relaxed release conditions, easy approach to auditing, unlimited financing, financing long-term compared with bank loans,flexible funds-raised, low financing cost.December 2013,Shanghai equity trading and hosting center issued <The Interim Measures of private debt business of Shanghai equity trading and hosting center >.On the basis of SMEs business on the private debt,private debt issued by Shanghai equity trading and hosting center,let go of the real estate companies and financial companies in which the two trade are restricted,the time constraints issued for a period of three years or less, the credit requirements of 2A or 2A + security company guarantee normally.The private debt of Shanghai equity trading and hosting center has a lower issued threshold.However,private debt with these advantages, at the same time for investors, lack of liquidity and have high risk.investors dare to participate.To open the private debt market, credit enhancement method is indispensable to prevent credit risk.Firstly,this paper summarizes the theoretical research of private debt and credit enhancement,analyses the operation characteristics and the development of property ownership of this kind of special commercial real estate model.Then,it discusses the financing situation, the issue of private debt issuance conditions, processes and elements and existing problems,constructs the private debt financing mode based on the perspective of credit enhancement.And then, combined with the actual case of SH company,it Introduces the background of SH Company, financial status, the industry situation and planning, analysises of the financing process of company private debt financing, including capital structure, to raise funds to invest, maturity and interest rate and repayment plan.Based on the analysis of SH company, it studies the reasons why to choose private debt financing mode,risk factors existed,the effects of the company business after the issuance,points out the choice of credit enhancement and the reasons.There are three kinds of methods,fixed assets mortgage, pledge of accounts receivable mortgage and setting accounts receivable collection.Finally, in view of the private debt market,it puts forward credit enhancement suggestions, namely, the construction of credit rating system,the development of credit risk-transferred and hedging products, the establishment of credit default metric method.Private debt business launched time is short,both in Shanghai stock exchange and Shenzhen stock exchange, or Shanghai Stock Exchange Center of regional OTC market.lacking of relevant theoretical research, having difficulty to obtain a non listed company data, the case analysis of private debt business has some limitations and sidedness, the research is not deep enough.Therefore this paper finally prospects the future research direction of vision, hope to provide ideas and reference for the property owner financing in China similarly.