The Advantages And Risks Of Asset Securitization

In September 2014,China's Securities Regulatory Commission issued a new regulation which had changed the original approval system of asset securitization business into record system,it had greatly shortened the time for product issuance,opened up new financing channels for major enterprises,improve the feasibility of asset securitization,and asset securitization of enterprises began to enter the right track.Among them,asset securitization activities of real estate enterprises are particularly active,with property fee income,house purchase end funds and other assets as the target assets for securitization financing,which has become a new dynamic of innovative financing for housing enterprises.Since the second half of 2016,tighter credit policy made the financing environment for real estate companies more difficult;In March 2018,in response to the Fed rate increase,China's central bank indirectly raised interest rates by means of open market operations,and some funds were withdrawn from the stock and bond markets,making traditional equity and bond financing more difficult.According to the market background and the current financing situation of housing enterprises,it is of great significance to study the advantages and risks of asset securitization of housing enterprises,to understand the products of asset securitization,to use financial instruments reasonably and to prevent risks actively.Firstly,through the financing mode of the real estate enterprises and the research on the advantages and risks analysis of asset securitization of non-financial enterprises in the existing literatures,we summarized the existing research foundation,introduced the recent development of asset securitization as a financing tool of Chinese estate enterprises,and explained the external and internal motivation of choice of asset securitization as a financing tool.Then,this paper analyzes the advantages of asset securitization in capital cost,risk isolation,enterprise asset liquidity and enterprise wealth,and the risk and system risk that the housing enterprises may face in the process of asset securitization.Finally,the asset securitization products,which are issued by Jinke stock company,are taken as an example.This paper analyzes the capital model,financial data,market reaction and expected cash flow,and discusses the advantages and risks of financing by the tool of equity securitization.The theoretical and case analysis results of this paper show that:Asset securitization,as an innovative financing tool for housing enterprises,has obvious advantages and will bring certain risks to enterprises.On the one hand,asset securitization has a relative advantage over traditional financing instruments.To a certain extent,it can reduce the financing cost of the housing enterprises,reflect the role of risk isolation,enhance the liquidity of the assets,and realize the increase of the enterprise wealth.Among them,the risk isolation is the unique advantage of the asset securitization.For the low credit rating housing enterprises,it can show a more obvious advantage in reducing the financing cost.On the other hand,in the process of securitisation,the housing enterprises may face the risks of the misuse of cash flow forecasting,the loss of the solvency,the increase of the probability of bankruptcy and the lack of liquidity in the second-level market.Therefore,when making use of this new tool to carry out enterprise financing,real estate enterprises should give full play to their advantages while doing the corresponding risk management actively.