Credit enhancement refers to the use of various effective means and financial instruments to ensure that the debtor pays the principal and interest of the debt on time, thus improving the quality and security of the transaction and thus obtaining a higher credit rating.

The advantages of credit enhancement are mainly reflected in the following four points:

Improving the Credit Rating of Bonds-Reducing the Financing Cost of Bonds

Improve the liquidity of bonds-"; Increase investors' willingness to buy

Improving the market competitiveness of bonds-expanding the scale of issuance

Reduce the risk of bonds-improve the confidence of investors

Credit enhancement is mainly divided into internal credit enhancement and external credit enhancement:

Internal credit enhancement-priority substructure, credit trigger mechanism, excess spread, excess cash flow coverage, excess mortgage, margin/reserve account, asset repurchase mechanism. ......

External Credit Enhancement-Third Party Guarantee, Differential Payment, Liquidity Support, Joint Debtor ......