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Following SZSE’s successful issuance by tender of the first batch of Sichuan Local Government Bonds, eight securities companies including Zhongshan Securities, CITIC Securities, China Securities and Guotai Junan Securities commenced an on-line distribution of over CNY150 million bonds to individual and institution investors in an orderly manner on August 2, 2017; about CNY70 million of the subscription came from more than 18,000 individuals who signed up via SZSE’s centralized bidding system, a breakthrough given the number of individual investors involved and the amount contributed thereby.
To support legitimate government borrowing is an important task of SZSZ and an important step to implement relevant arrangements of CSRC on stabilizing the development of the bond market of stock exchanges in accordance with the spirit of the National Financial Work Conference. Higher credit status on the part of issuer and the tax-free policy for interest earnings are contributing to the investment value of local government bonds; yet most of these advantages remain little known to investors in the securities market. Therefore, by taking advantage of securities companies’ dual roles as underwriter and broker, SZSE tried to mobilize relevant securities companies to popularize knowledge on local government bonds through various channels, and launched the on-line subscription, a way more familiar to investors, so that individual investors would be able to subscribe for the local government bonds conveniently. Over 18,000 individuals participated in the on-line distribution of Sichuan Local Government Bonds, which fully reflects the diversification of the investing group in the stock exchange and the enhancement of financial inclusion. Meanwhile, the role and potentials of securities companies in local government bond underwriting and issuance were deepened and furthered explored. The bond issuance has created a win-win situation for issuer, intermediaries and investors.
Local government bond issuance via the stock exchange expands the channels of bond issuance, and it’s also an important institutional arrangement of the Ministry of Finance and CSRC in accordance with the spirit of the State Council on regulating the administration of local government bonds and preventing financial risks. Next, SZSE shall try its best to carry out work related to local government bond issuance by tender in the future, explore and make full use of the advantages of the stock exchange, further diversify the investors of local government bonds, enhance the attractiveness of local government bond market and provide support and services for the sound development of local real economies.
