Case Study On Asset Securitization Of New Water Source PPP Project

As China's urbanization process has deepened,the demand for basic public facilities has also increased,making government departments under enormous pressure on fiscal expenditures.In order to revitalize assets,the government encourages social capital to participate in the construction of public facilities,that is,adopts the PPP model.However,the PPP model has the characteristics of long cycle,large investment volume,high construction difficulty,and uncertain policy,this is the reason why social capital has always been cautious.Asset securitization can provide an effective channel for the introduction of social capital for PPP projects.In 2016,the National Development and Reform Commission and the China Securities Regulatory Commission jointly issued the Notice on Promoting Asset Securitization of Government and Social Capital Cooperation(PPP)Projects in the Traditional Infrastructure Sector,marking the first official launch of the PPP project asset securitization by the relevant departments of the State Council.However,the asset securitization of PPP projects is still not mature and(is still)in the exploration stage.This paper selects the first single PPP project asset securitization case to conduct research.The article first introduces the research background and the practical significance of studying the existence of the subject.Then the concepts and theories related to PPP and asset securitization are briefly described.Thirdly,the case of “New Water Source PPP Project Asset Securitization” was introduced from the project background,special plan and transaction structure.Finally through the relevant subjects,macroeconomics,cash flow coverage,credit enhancement and other aspects of the case to carry out a detailed analysis to the actual use of PPP project asset securitization.The central content of this paper is to study the impact of PPP on China's first PPP project asset securitization-"Pacific Securities New Water Source Sewage Treatment Service Charging Revenue Assets Support Special Plan"(hereinafter referred to as the new water source PPP project asset securitization)as an example.In this article I try to discuss whether the project asset securitization will cause default in the repayment process,and make detailed predictions on the future cash flow of the sewage treatment plant under the new water source PPP project.At the same time,it compares the case of China's first PPP project asset securitization default--"Dacheng Xi Yellow River Bridge toll income income right special asset management plan",to analyze the essential reasons of its default and then analyzes the reasons and potential of the success of the new water source PPP project Risk and then make targeted recommendations for its risks.At the same time,it puts forward five general recommendations for the subsequent PPP projects that want to carry out asset securitization,paying attention to the impact of macroeconomics and industry on future cash flow,establish a sound default treatment mechanism,strengthen the risk management and control of PPP asset securitization projects,strengthen the legal system construction,and transform Government Functions.