The emergence of project-backed securitization

Author: | Published: 1 Jan 2000

Zhang Xin, former in-house counsel at China Construction Bank, reviews the emergence and development of this structure and argues that the secured loan arrangement is the core of a successful deal

The end of the millennium brought with it a boom in Euromarket securitization. It was not only the scale of cross-border deals that impressed, but also the more complicated structures innovated within creative financial sectors and investment banks.

One trend is particularly worthy of attention: the emergence and development of project-backed securitization, which derives from traditional asset-backed securitization techniques, but encompasses a different market philosophy. The term "project-backed securitization" is defined as the financial device that securitizes cash flow streams derived from the whole business of one project or a group of projects.

The emergence of project-backed securitization

Traditionally, asset-backed securitization refers to the issuance of marketable securities backed by the expected cash flow from a pool of specific assets (eg,...