China’s first batch of PPP asset securitization projects that draw a lot of attention were officially launched. On March 10, “China Securities - Insigma Tunnel of Qingchun Road PPP Project Asset Backed Special Plan”, China's first and Zhejiang province’s first PPP asset securitization project, received a no action letter from Shanghai Stock Exchange and was successfully launched on March 13.
The official launch of China’s first batch of PPP asset securitization projects marked the construction and improvement of PPP investment and financing system, exerting a significant influence on sustainable development of PPP business, said Zhu Feifei, an analyst of Industrial Research Company. As the project promotion institution, custody bank and investor of the product, IB helped with the successful launch of this project.
“China Securities - Insigma Tunnel of Qingchun Road PPP Project Asset Backed Special Plan” takes profits of tunnel franchise contract of Qingchun Road, Hangzhou city owned by Hangzhou Qingchun Road Underwater Tunnel Co., Ltd., a subsidiary of Insigma Group, as the basic asset. It totals RMB 1.158 billion of which Senior A securities amount to RMB 0.7 billion and Senior B securities RMB 0.4 billion (subscribed by IB), with issuance rates of 4.05% and 4.15% respectively. This project is also a model project with the largest amount among the first batch.
At the end of 2016, Notice on Promoting Work Related to Public-Private Partnership (PPP) Project Asset Securitization in the Field of Traditional Infrastructure, co-issued by National Development and Reform Commission and China Securities Regulatory Commission, opened the door for the first batch of PPP project asset securitization. In cooperation with Asset Management Association of China, Shanghai and Shenzhen Stock Exchanges, it establishes green channel of PPP securitization, makes effort to set up PPP capital exit mechanism, activates the stock of PPP asset and motivates social capital to enter the field of PPP.
According to data from Public-Private Partnership Center of Ministry of Finance, by the end of 2016, the number of projects included in PPP Projects Bank of Ministry of Finance has reached 11260 with a total investment of RMB 13.5 trillion. Once channel of asset securitization is opened, PPP projects can run in a more vigorous way.
In 2013, IB organized a professional asset securitization group, and has successively issued the first trust ABN with circular purchase structure, the first REITs and the first consumer finance ABN in inter-bank market, showing prominent ability of innovation in the field of asset securitization. Meanwhile, IB takes the advantage of the group and multi-license operation to provide financial services covering the whole life circle. At present, it has realized financing of over 10 billion and has achieved comprehensive outcome in serving the real economy.
PPP asset securitization helps activate the stock of asset of PPP projects, attract more social capital to participate in development of PPP projects, enhance liquidity of asset, expand channels of financing for infrastructure, reduce financing cost and leverage ratio of enterprises and give more impetus to supply-side structural reform.” Lin Shu, GM of IB’s Investment Bank Department, said.