1. Introduction of asset securitization products of Jingdong Baitiao
When shopping on JD.com, buyers can buy on credit without paying immediately. This "consume first, pay later" payment method can enjoy a deferred payment period of up to 30 days or a maximum of 24 instalments.
If you choose to pay by instalments, the charges for the white bars are as follows:
At first glance, its monthly fee rate is only 0.5%-1%. In fact, after converting the annualized interest rate, the annualized rate of return of 0.5% for 3 months is about 9%, and the annual rate of 1% for 24 months is about 25%. %, which is comparable to the interest rate of a common bank credit card.
After the buyer makes a white note, it is equivalent to Jingdong holding a small loan from the buyer. This loan is also the basic asset of JD.com.
A security is a certificate, and the holder of this certificate has the right to share the income generated by the underlying asset. What we usually call asset securitization is to package the basic assets that can generate stable cash flow to build an asset pool, and issue securities based on the cash income generated by this pool in the future.
The baitiao loan issued by Jingdong will "recover repayment and interest" in the future, which is the "assets that can generate cash flow" as mentioned above. Therefore, JD.com securitized Baitiao assets and issued a total of 800 million securities, which were divided into priority 01 accounting for 75%, priority 02 accounting for 13%, and secondary asset-backed securities accounting for 12%. These three grades are all securitized products of JD Baitiao. The specific income can be seen in the disclosure of Huatai Assets' establishment announcement.
The priority 01, priority 02 and subordinate need to be explained here. According to the rules of this product, the funds recovered from the loan will be "priority repayment" for the priority 01 product, and then the priority 02 will be repaid, and the rest will be given to secondary. So the sub-tranche in the table above doesn't have a fixed interest rate, it's what you get left over.
In the case of JD.com, priority 1 products and priority 2 products were sold to other institutional investors, and the second-tier products were held by the original owner (that is, JD.com itself).
I don't understand it just by reading the text, we simply make an assumption and calculate it.
As mentioned above, the instalment period of Jingdong Baitiao is different, the instalment interest rate is different, and the number of participants is still very large. Some people borrow 9% interest rate for three months, and some people borrow 25% interest rate for two years - so this asset The comprehensive interest rate of the pool is difficult to estimate. In order to simplify the calculation, we may make a bold assumption: the comprehensive rate of return of the underlying assets of Jingdong Baitiao is 15%.
In the absence of bad debts and no transaction costs, the income of the three types of assets of JD.com is as follows:
According to calculations, if the rate of return of the underlying assets of Jingdong Baitiao is 15%, the rate of return of subordinate products will be as high as 85%, which is simply frustrating.
Of course, real secondary products can not calculate the income in this way. The process of asset securitization involves many subjects, so certain fees will be incurred, such as taxes, custodian fees, rating fees, attorney fees, underwriting fees, etc., which will be paid before the principal and income of the subordinate tranche. The typical comprehensive rate is generally about 1%-1.5%. This product of JD.com is more complicated and the cost may be relatively high. In addition, this product uses a recurring purchase model, and the capital utilization rate will be discounted.
Another big problem is that loans will have defaults and bad debts. As the bad debt rate rises, the yields of subordinated products will drop rapidly. The specific situation is as shown in the figure below.
The red line in the figure is the yield of subordinated products. As the bad debt rate rises, its yield drops rapidly from the highest 80%, with a huge slope. Its earnings fell by 8.33% for every 1 percentage point increase in the bad debt rate.
The blue line in the graph is the yield on the priority 2 product. Since the secondary products act as a "safety pad" for absorbing bad debts, as long as the overall bad debt rate does not exceed a certain value, the rate of return of the priority 2 can be constant at 7.3%. When the bad debt exceeds the critical point, its income will begin to decline, and its income will drop by 7.69% for every 1% increase in bad debt. This critical point is numerically equal to the point at which the second-tier products subsidize the first-tier products and lose all the principal.
The green line in the graph is the yield on the priority 1 product. Since both secondary and priority 2 products can act as safety pads. It guarantees a 5.1% yield with a higher bad debt ratio.
The figure above is just a simplified computational model. The real product will be a little more complicated, such as adding liquidation trigger conditions, but the general structural logic is like this. Structured tiering is the secret of "guaranteeing capital and guaranteeing income" for fixed-income products. During product design, financial engineers will do statistical analysis and stress testing to ensure that the critical point of priority 01 products has a very low probability of being breached. We can also see the same structure in products such as tiered funds and asset allocation trusts.
Through such a tossing, JD.com has come up with the "Jingdong Baitiao Accounts Receivable Debt Leasing Asset Support Special Plan". Looks very tall.
2. Where are the advantages of securitization products?
1. Self-improvement
"Maintaining principal and interest" is undoubtedly very suitable for investors' tastes.
As can be seen from the above example, tiered securitization products can increase their own credit through internal tiering. Due to the buffering of the secondary grade products, the safety of the priority products is improved. Because of large-scale bad debts, the probability of "losing money" for priority investors is very low. This is also the reason why some securitized products can receive high ratings. JD.com's two priority products have been awarded AAA and AA- ratings by United Credit Ratings Co., Ltd. Moody's, which has previously been reported by Wangdaijia, has a high rating of Aa2 for assets issued by SoFi, which also have a similar tiered structure (and high-quality underlying assets).
2. Improve liquidity
Securitization also means standardization, and standardization means better liquidity. Because it is standardized, everyone can agree with it and are more willing to accept it. If the platform wants to sell a standardized product, it will be easier to sell than fragmentary claims. For the platform, it is easier to let the funds flow.
At present, a major risk faced by Internet financial platforms is liquidity risk, and standardized products can solve this problem to a certain extent.
3. Avoid capital pool compliance risks
In the early stage of development, some Internet financial platforms may need to borrow capital pools to assist their operations. The Jingdong Baitiao mentioned above actually has something like a "capital pool", but it is legal and compliant. According to the "Regulations on the Administration of Asset Securitization Business of Securities Companies" promulgated by the China Securities Regulatory Commission in March 2013, it is proposed that "special plan assets are formed by cyclically purchasing new basic assets of the same type by generating cash flow from underlying assets". Since then, asset securitization has been allowed to use the "cycle purchase" method, with a large pool of funds, holding short-term claims and carrying long-term debt.
Specifically, the product period of Jingdong Baitiao Assets Special Assets Plan is 24 months, and the first 12 months are the revolving purchase period. During this period, JD.com will select qualified underlying assets for circular purchases according to the standard. This kind of fund pool is completely different from the "risk of misappropriation" fund pool.
4. The biggest advantage: highlighting the value of Internet finance
The highlight of the above Jingdong Baitiao is not the high yield of 85%, but the fact that as long as the bad debt rate is reduced by 1 percentage point, the yield of subordinate products can be increased by 8.3 percentage points. This high leverage gives the platform greater motivation to manage assets and manage risks.
If traditional finance plays capital operation, then Internet finance plays data operation.
JD.com has withdrawn more than 700 million funds through securitization. In the end, it only holds sub-products of less than 100 million (let's not talk about risk weight coverage), and can enjoy the additional benefits of scientific management of 800 million white bars. income. As an Internet company, JD.com has its own data base and should be better at managing the quality of loans on its platform. Through this means of securitization, it amplifies the value brought by the characteristics of Internet finance.
3. Challenges of Internet financial asset securitization
Asset securitization looks very professional and far away, but it has actually developed to a large scale and has practical applications in exchanges, inter-bank markets and even the fund industry. At present, the regulatory authorities are also supportive in terms of policies, and several documents have been published to promote the development of securitization (only one is customized for Internet finance).
The above mentioned its many advantages: investors like it, and the platform likes it. Why haven't we been able to see it "blooming everywhere" and "savagely growing"?
The main challenge of Internet financial asset securitization is that the market environment has not yet been cultivated. Because there is no trading market and supporting service providers, the characteristics of "real sale" and "bankruptcy isolation" are empty talk. Because there is no trading market, the pricing of secondary products is difficult, and the "gambling" is relatively large, and investors are not willing to accept this kind of thing. Because there are no supporting service providers, it is difficult for asset securitization products to use derivatives to manage hedging risks. Because there is no supporting service provider, the rating business still lacks sufficient credibility support. Because of such restrictions, we can only see some platforms have attempts to "quasi" securitization products, and it is difficult to see real Internet financial securitization products.
Article source: http://finance.ifeng.com/a/20151007/14006291_0.shtml