Analysis On Financing Mode Of Shantytown Transformation Supported By China Development Bank

Shantytown transformation, as a critical project for improving people's livelihood in China, has been attracting an extensive attention from all society. In implementation of the transformation, however, the biggest problem is where the money comes from. China Development Bank, as a developmental financial institution, has the obligatory duty to support national key projects.As a developmental financial institution, China Development Bank, unlike other commercial banks, is not able to raise fund from resident deposits. Its major financing channel is to issue financial bonds. In consideration of the State Council's proposal to revitalize stocks and develop innovative finance, the on-balance sheet asset securitization with low risk and high profit--a product of Covered Bond--is designed in this article based on characteristics of the Bank's assets and liabilities as well as on relevant laws in China, to provide financial support to the project of shantytown transformation, meanwhile to broaden the financing channel of the Bank, to improve the asset-liability mismatch and to lower its financing cost.The article first analyzes the financing situation of China Development Bank on the Shantytown transformation. Then it makes a comparison between two financing patterns: the on-balance sheet asset securitization and the off-balance sheet asset securitization. After that it designs a new product of Covered Bond,during designing the product, this article makes analysis and description from aspects such as purpose, framework, main participants, selection of assert pool, dynamic management and isolation of risk, etc. The final part of the current article is a referential summary on creating a good, stable issuance market in China.