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HOME > News > Transactions and Cases > AllBright advises China’s first assets securitization project of commercial bills with bank guarantee on bill discounting

AllBright advises China’s first assets securitization project of commercial bills with bank guarantee on bill discounting


On August 8, 2016, China’s first assets securitization product of commercial bills with bank guarantee on bill discounting---CITIC Securities-Minsheng Bank No.1 Special Asset-backed Plan for Rights to Earnings on Commercial Papers (hereinafter referred to as “Minsheng Papers No.1” or “Current Special Asset-backed Plan”) was successfully issued and established. The Current Special Asset-backed Plan is set up by China Minsheng Banking Corp., Ltd. (“Minsheng Bank”) as the agent of the original beneficiary and CITIC Securities Co., Ltd. as the plan manager, and Shanghai AllBright Law Offices provides all-sided legal service for the plan. Previously, the CITIC Securities-Minsheng Bank No.1-10 Special Asset-backed Plan for Rights to Earnings on Commercial Papers launched by Minsheng Bank has obtained the No-objection Letter for the issuance quota of RMB10 billion Yuan from the Inter-Institutional Price Quoting and Service System for Privately Placed Products (the “Price Quoting System”), and this is the first assets securitization product issued by the Price Quoting System by means of shelf registration. The underlying assets of the Current Special Asset-backed Plan are the rights to earnings on commercial bills to which the original beneficiary shall be entitled pursuant to the commercial bills, and set up excess spread, pledge security of commercial bills, guaranteed discount of commercial bills and other enhancement measures, and arranged for risk prevention measures in the assets exchange, which have strictly controlled the risks. The preferred asset-backed securities under the plan have obtained the AAA rating granted by China Chengxin Securities Rating Company Limited. The team consisting of senior partner SUN Lin, senior associate XI Lele and associate GU Zhaoqiuhui has provided all-sided legal service for the project, including transaction structure design, the negotiation, drafting and review of the full set of asset-related and transaction-related documents such as the prospectus of the Special Asset-backed Plan, standard terms and conditions of the Special Asset-backed Plan, assets purchase and sale agreement, assets service agreement, subscription agreement and risk disclosure. In the past ten years, China’s bills market has witnessed rapid development and the cumulative number of acceptance and issuance of bills and cumulative discount number of bills in China keeps surging, which has produced extremely great boosting effect to the economic growth. Commercial acceptance bill as a credit payment instrument is of great significance in promoting the enterprise development, bank operation, market circulation, economic boom and social credit development. Under the current trend that “finance shall support the real economy development, conduct macro control and make good use of the increment” initiated by the central government, the asset securitization of bills will play an important role in supporting the real economy development, satisfying the financing needs of enterprise and boosting modern financial enterprise reforms. Comparing with such enhancement measures as adopted by the current products in assets securitization of bills as full margin and bank guarantee, “Minsheng Papers No.1” has created a new mode of bank credit attached to bills, namely, guaranteed discount of commercial bills, which is of greater innovation value and significance in actual operation. According to information, “Minsheng Papers No.1” is the first asset securitization project of Minsheng Bank for commercial bills, which receives high recognition from the Price Quoting System and the investment institutions.