A Study On The Derecognition Of Risk Assets Of Financial Leasing Asset Securitization

This article selected “Far East Horizon(Tian Jin)? ” asset-backed security as the object for the case analysis,which was the first asset-backed security in financial leasing companies that charged by the Ministry of Commerce.This article would combine the analysis of specific transaction structure with internal and external factors to analyze the factors that may influence the derecognition of risk assets,following the trail to judge whether or not should terminate the recognition.Based on the relevant studies that described the securitization of financial lease assets,this article introduced the basic information about Far East Horizon(Tianjin),asset pool,credit enhancement methods,and basic information of asset-backed security of the product,and then analyzed the factors that may influence the derecognition of risk assets from both legal and accounting perspectives.Finally concluded that the real sale and bankruptcy segregation were the protections of derecognition of risk assets.The rational design of securities classification,liquidity support,excessive principal and interest coverage were necessary measures to realize the derecognition.At the same time,good quality of basic assets and an active secondary market would have a great role in promoting the derecognition.At the end of this article,we put forward related suggestions from the perspectives of financial leasing companies and the policy system based on related analysis and China's actual situation.We believe that the use of asset securitization by financial leasing companies to terminate recognition of risk assets effectively can be achieved mainly through these means,such as the selection of good quality basic assets;multi-enterprise joint provision of basic assets;reasonable design of transaction structure to reduce the proportion of secondary holdings;setting moderate excessive principal and interest coverage;seeking stronger external credit support and partially terminating recognition of risk assets to release some of them.In addition,to improve the relevant system construction,we recommended that we can use trust model to achieve true bankruptcy segregation,improve relevant regulations to transfer ownerships of lease items along with risk assets,enhance secondary market liquidity of financial leasing assetbacked securities,unify risk compensation measurement model and refine measurement methods of financial assets,etc.