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The Ministry of Finance-SZSE Government Bonds Issuing System was formally launched on August 1, 2017, and it was through the system that the 5th batch of 2017 Sichuan local government bonds were successfully offered, signaling an expansion of channels for local government bond offering.
Sichuan local government has issued by tender a total of 4 tranches of bonds ranging from the 17th tranche to the 20th tranche, raising a total of 30 billion yuan. The 4 tranches of government bonds are issued with 4 different maturity periods: 3-year term, 5-year term, 7-year term and 10-year term, each tranche accounting for 9 billion, 9 billion, 9 billion and 3 billion of the funds raised, with an interest rate of 3.76%, 3.87%, 3.98 and 3.98% and a subscription rate of 260%, 215%, 269% and 268% respectively. There were 42 underwriters involved in the issuance, including 12 securities companies such as CITIC Securities, Zhongshan Securities, Guosen Securities, GF Securities, Sinolink Securities, Guotai Junan Securities, Hongxin Securities, BOC International, CICC, Haitong Securities, China Securities and Huafu Securities. The securities companies were actively involved in the issuance, underwriting 3.34 billion yuan or 11.13% of the total bonds issued. Bank underwriters account for 26.66 billion yuan or 88.87% percent of the issue amount.
In recent years, SZSE attaches significant emphasis to their work and services related to local government bonds. SZSE party committee has made special arrangements and researches before finally finishing various work including building a technical system, issuing regulatory guidelines and making market preparations, with professional guidance from the ministry of finance and the support from CSRC and through the collaboration of local governments, registration institutions, banks and securities companies. Meanwhile, SZSE also made earnest efforts to push through individual investors’ subscription for local government bonds by means of on-line and off-line distribution, which is a pilot project involving 8 securities companies such as CITIC Securities, Zhongshan Securities, Guosen Securities, GF Securities, Guotai Junan Securities and Hongxin Securities. 12 distribution codes were granted to the securities companies so that individual investors would be able to subscribe via the SZSE centralized bidding system at a certain price on the distribution date on a first-come-first-serve basis.
The successful launch of the local government bond issuing system and the issuance of the Sichuan bonds signal an expansion of the bond issuing channels for local governments. At the same time, individual investors’ participation in the subscription shall further diversify the investment group for local bonds. Next, SZSE shall continue to promote innovation of relevant mechanisms and institutions, assist in developing the local government bond market and provide better services and support for the construction of local economies.
As per the Memorandum of Cooperation on Promoting Asset Securitization of Government-Social Capital Projects jointly signed by SZSE, Sichuan Finance Department and Sichuan CSRC on the same day, the three parties shall forge a all-sided, multilayer, and long-term relationship to establish and optimize a PPP project recommendation mechanism, actively nurture and guide the market, and strengthen information sharing and regulatory cooperation. By taking the opportunity of signing the memorandum, SZSE shall further push forward the innovative financing methods for quality PPP projects in Sichuan, cut back on financing costs, integrate and make full use of available resources and deepen the role of asset securitization in serving real economy.
