Sustainable construction and financing—asset-backed securitization of expressway’s usufruct with redeemable rights

Qiming Zhang, Linda Yin Nor Tjia, Biyue Wang, Aksel Ersoy

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Abstract

Asset-backed securitization will greatly promote the sustainability of infrastructure construction and financing. However, there are quite limited researches conducted in this field. Given the project characteristics of infrastructure project securities, this paper proposes the issuance steps of redeemable asset-backed notes (ABN) based on the infrastructure project’s usufruct as the basic asset. Taking the expressway franchise as an example, the issuing scale and coupon rate of the redeemable ABN are determined by the expected cash flow of the expressway, the term structure of random interest rates, and the option-adjusted spread (OAS). In addition, this research analyzes the duration, convexity, and OAS.

Original languageEnglish
Article number9113
Number of pages17
JournalSustainability (Switzerland)
Volume13
Issue number16
DOIs
Publication statusPublished - 2021

Keywords

  • Asset-backed securitization
  • Infrastructure project
  • Redeemable asset-backed notes

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