DeHeng Provided Legal Services for the Issuance of
"Western Securities-Zhongtai Securities Lender Rights
No. 1 Asset-Backed Securities"

2017-09-19

The Cash/Securities Lender Rights ABS "Western Securities - Zhongtai Securities Cash Lender Rights No. 1 Asset-Backed Securities" ("Zhongtai Lender No. 1") was established on September 8, 2017, for which DeHeng Shanghai Office provided a full range of legal services.

Zhongtai Securities is the original equity holder of "Zhongtai Lender No. 1", and Western Securities serves as the plan manager. Target is to raise RMB 1 billion, including priority asset-backed securities for RMB 950 million, with a rating of AAA and the expected rate of return of 4.84%, and secondary asset-backed securities for RMB 50 million.

DeHeng Shanghai once again assisted in the successful launch of the ABS "Zhongtai Lender No. 1", following two of the very first lender asset securitization projects "Guotai Jun'an Lender No. 1", and the "Qilu Securities Asset Management – Orient Securities Cash Lender Rights No. 1 ABS Special Plan" in August 2015.

The underlying assets of "Zhongtai Lender No. 1" is the cash lender rights owned by the securities company, characterized by full diversity, high frequency of change and complex business structure. Therefore, the plan adopted the mode of cyclic asset purchase and set a strict standard for underlying asset pool, ensuring the security and dispersion of the assets entering the pool. Meanwhile, in order to reduce the maturity mismatch between the securities and the lender’s rights, and ensure the return rate of the asset pool, it uses automated asset screening system for cyclic asset acquisition; and the plan also includes repurchase commitments from original interest holders, so as to reduce the credit and duration risks of the asset pool and provide effective protection for the security of the special plan.

DeHeng Shanghai team lead by partners Shen Hongshan and Li Zhenhui participated in the feasibility discussion, plan designing, and legal compliance debate in respect of this product, and drafted the essential legal documents and issued legal opinions. DeHeng attorneys have carried out sufficient analysis and debate of the specific legal issues involved in this product.

The cash/securities lender's assets securitization of the securities company has made active use of a large number of high-quality stock assets of the securities traders, broadened the low-cost financing channels and promoted a virtuous circle of cash and securities lending business. We believe that there is great potential for broader financing channels through the assets securitization of lenders’ rights on the stock exchange.