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Today (10 March), three asset securitization products for public-private partnership (PPP) projects in the traditional infrastructure field are approved by the Shanghai Stock Exchange (SSE). An official of the SSE answered relevant questions raised by journalists
Q: It is learnt that today, the 3 asset securitization products for PPP projects get a no-objection letter for listing and transfer from the SSE. Could you introduce more about the three products, the first batch of this kind after the National Development and Reform Commission (NDRC) and the China Securities Regulatory Commission (CSRC) released a relevant notice?
A: In order to implement the “Opinions of the CPC Central Committee and the State Council on Propelling the Investment and Financing System Reform” (Zhong Fa [2016] No. 18 Document) and other documents, facilitate the supply-side structural reform and enhance the ability of the capital market in serving the real economy, the NDRC and the CSRC co-released the “Notice of NDRC and CSRC on Advancing the Work Concerning Asset Securitization for PPP Projects in Traditional Infrastructure Field” (NDRC Investment [2016] No. 2698) in December 2016, and the SSE released the “Notice of Advancing Asset Securitization Business for PPP Projects in Traditional Infrastructure Field” in February 2017. Under the guidance of the NDRC and the CSRC, the SSE recently handled the applications for listing and transfer of the following three asset-backed securities products: Charge Usufruct of CITIC Securities - Beijing Capital Sewage Treatment PPP Project, Heat-supply Charge Usufruct of CFLD Gu’an Industrial Zone’s New Urbanization PPP Project, and China Securities - INSIGMA Construction Investment Qingchun Road Tunnel PPP Project. As these three products comply with the SSE’s conditions for listing and transfer, the SSE approved them and issued the no-objection letter this week. It marks that the asset securitization products for PPP projects in the traditional infrastructure field promoted by the NDRC and the CSRC officially came into being.
The three PPP projects in the traditional infrastructure field are among the first batch of securitization projects recommended by the NDRC, with the details as follows:
The asset-backed special plan for the Charge Usufruct of CITIC Securities - Beijing Capital Sewage Treatment PPP Project, with four wholly-owned water affairs subsidies under Beijing Capital as the originators and the charge usufruct of sewage treatment held by the four subsidies under the sewage treatment PPP project as the underlying asset, boasts a total size of RMB530 million, with the size at the preferred level (rated AAA) up to RMB500 million.
The asset-backed special plan for the Heat-supply Charge Usufruct of CFLD Gu’an Industrial Zone’s New Urbanization PPP Project, with the heat-supply charge usufruct of Jiutong Public Utility, a wholly-owned subsidy of CFLD, in Gu’an Industrial Zone in the next six years as the underlying asset, boasts a total size of RMB706 million, with the size at the preferred level (rated AAA) up to RMB670 million.
The asset-backed special plan for China Securities - INSIGMA Construction Investment Qingchun Road Tunnel PPP Project, with the contract creditor’s right of Hangzhou’s Qingchun Road Tunnel’s franchise owned by a subsidiary of INSIGMA Group as the underlying asset, boasts a total size of RMB1.158 billion, with the size at the preferred level (rated AAA) up to RMB1.1 billion.
Generally speaking, the three projects, respectively in the public utility field of sewage treatment and heat-supply charging and in the infrastructure construction field, are all PPP projects in the traditional infrastructure field. The PPP mode plays a positive role in improving China’s infrastructure, while asset securitization, one of the major financing ways in the infrastructure field, boasts its product features highly compatible with those of PPP projects of stable investment income and long return period. Advancing the PPP project asset securitization contributes to activating stock assets of PPP projects, attracting more social capital into PPP projects’ construction, enhancing the assets liquidity of PPP projects and fueling the supply-side structural reform.
According to relevant notice of the SSE, the SSE has set up a green acceptance and review channel for the qualified asset securitization products of the quality PPP projects, and the first batch of PPP project asset securitization products are handled by the specially-assigned persons, so that review will be immediately conducted after submission of the applications. Next, the SSE will earnestly carry out the requirements in the Government Work Report for helping enterprises activate stock assets and boosting asset securitization, consistently fuel innovation in the financing ways of PPP projects, support the PPP project asset securitization business of PPP project enterprises and relevant intermediaries, continuously play the role of the exchange-traded bond market in serving the real economy, and ensure the long-term and sound growth of the PPP project asset securitization.
