Research On Legal Regulation Of PPP Project Asset Securitization

In recent years,under the leadership of government departments,PPP project has become the new hotspot of economic development in China,and boosted the efficient and quality development of public products and service market.However,the development of PPP project in China is being challenged by shortage of funds.The financing method of asset securitization can enrich the financing channel for PPP project,providing necessary funds for the construction of PPP projects.Meanwhile,asset securitization guides the financial market to invest in real economy instead of virtual economy,thus financing the development of real economy.Therefore,the integration of asset securitization and PPP project will complement each other's advantages.Asset securitization boasts the advantage of bankruptcy isolation,which means that the securitized asset is separated from other assets of the initiator,so that securitized asset will not undergo bankruptcy liquidation when the initiator goes bankrupt.Compared with other asset securitization projects such as securitization of receivable credit assets,asset securitization of PPP project shows unique characteristics due to PPP project's attribute of integrating public and private capital.Asset securitization of PPP project,as a newborn method,is lack of legal regulation on its market.Hence,huge risks in each process of PPP project asset securitization should be identified in advance,and these risks should be guided and regulated in the form of law to avoid aggregate financial risk.This paper analyzes the legal issues concerning PPP project asset securitization,including identification of basic assets,establishment of special purpose vehicle,sales of assets,credit rating and asset follow-up management.The paper also puts forward the suggestion to improve China's laws and regulations in regard to PPP project asset securitization.Regarding gains of PPP project as basic assets is essentially regarding future claims as basic assets,so the transfer of gains of PPP project has no severability,which requires to improve the relevant regulations on future debt.Since the existing SPV in China is not independent,the legal regulation on organizational form,business scope and other aspects of SPV is needed.Moreover,there is no rule for recognizing “real sales” in China.It is recommended to set China's standards for “real sales” by referring to “Sale Harbor System” of the US.Finally,it is required to regulate the credit rating market,focus on the constant disclosure of basic asset information,and strengthen the protection of investors' legitimate rights and interests.