A Case Study On The Securitization Of PPP Projects

As a newly developed model for financing public goods and services,the PPP(Public-Private-Partnership)securitization has become the hottest topic in the theory and practice field of public management as the continual government reform in China.Though BOT,ROT,TOT and so on have been practiced for a long time in China,the PPP model that the government promotes now emphasizes the collaboration between the Public and the Private,in which the government becomes a partner,not an authority,this transformation requires the adjustments in ownership,operation,usufruct and risk allocation and so on.PPP projects feature huge investment,long term and low yield,which deter the private sector,but these problems can be solved by securitization.Securitization can liquid the PPP projects,help the private sectors recoup their investments.If properly designed,securitization can promote PPP in a sustainable way.This paper starts from the classical PPP philosophy and securitization theory,identifies characteristics of PPP securitization,which include the reliance on the original owner's operation ability and credit,as well as contracts completeness and securities' long term.Through the case study,this paper analyzes the structure of the deal,risks and prevention instruments,finds that the interest of the asset-backed securities is too low to be sustained and the securitization relies on the financing side's credit too much.To deal with the over low interest,this paper proposes to expand the profit patterns of PPP projects;to deal with the over reliance on the financing side's credit,this paper discusses the sinicization of WBS(Whole Business Securitization).