Research On Public-private Partnership Asset Securitization Model

With the rapid development of China's economy and the acceleration of urbanization,the scale of infrastructure and public project construction in China has expanded rapidly in recent years.The PPP model(Public-Private Partnership)has great advantages in attracting social capital investment and relieving government financial pressure.The PPP project has become an important model for accelerating the construction of infrastructure projects.However,due to the long operating cycle of the PPP project and the large amount of capital demand,the project funding needs are increasingly difficult to meet.In 2016,the National Development and Reform Commission proposed to combine the PPP project with the deepening development of the capital market.Asset securitization as a means of financing can be combined with the PPP model.Enriching the capital in and out of the channel through asset securitization and other financing methods,to promote the participation of social capital in the construction of PPP projects.However,with the promotion of the PPP project,in November 2017,the State-owned Assets Supervision and Administration Commission of the State Council issued Circular No.92,which proposed strict control and proper implementation of PPP projects.In 2018,many provinces have successively suspended some PPP projects.PPP projects lack of supervision and management,resulting in the local government debt crisis has gradually appearing.The PPP project standardization has a long way to go.Based on the current situation of financing of PPP projects,this paper analyzes the reasons for the financing difficulties of PPP project companies.First,the PPP project financing method is single,bank loans are difficult to meet the project funding needs.Second,the state's relevant laws and regulations are imperfect,government supervision is lacking.Third,the definition of social capital is unclear,and the withdrawal mechanism of funds is scarce.Based on the above analysis,this paper selects the case of Sewage treatment Public-Private Partnership project,discussing the feasibility and operational points of PPP asset securitization.The financing effect of the case is analyzed on two levels.First,matching between the cash flow of operating activities and the principal and interest of asset-backed securities.Second,matching between project forecasting operating cost and local financial subsidy expenditure.We found that asset-backed securities can enhance the attractiveness ofpublic project construction to social capital,broaden the financing channels for infrastructure construction,and ensure the safety and profitability of social funds.However,we also found that PPP asset securitization has risk factors such as excessively optimistic cash flow forecast,insufficient credit enhancement,information disclosure and loopholes in regulatory mechanisms,which may adversely affect future project operations.Based on the case study,this paper puts forward the PPP project financing risk response strategy.First,we should improve the policy legislation and improve the project information disclosure system.Secondly,optimize the product structure to make the use of funds more transparent.In addition,we also need to pay attention to the moral hazard of the project companies and third-party financing organization.Strengthen product credit enhancement measures.Finally optimize the investment and financing market environment,and cultivate mature and rational investors.