.jpg)
On November 11, 2016, the MOF-SSE Government Bonds Issuance System was launched, through which the 2nd batch of Shanghai Government General Bonds in 2016 was smoothly issued. Local government bonds now have a new issuance channel.
According to the new “Budget Law” and the “the Opinions of the State Council on Strengthening Management of Local Government Bonds” (Guo Fa [2014] No. 43 Document), local governments financing through issuance of government bonds have adopted the self-issuance and self-repayment mechanism in an all-round way since 2015, with the issuance size dramatically ascending. To give full play to the function of the exchange-traded bonds market and further improve the building of the local government bonds market, the Shanghai Stock Exchange (SSE), under the instruction of the Ministry of Finance (MOF), developed the MOF-SSE Government Bonds Issuance System and made full preparations for relevant business and technologies. On October 17, the MOF gave a written reply of approving the launch of the system for issuance of local government bonds. The Shanghai Government Bonds issued this time are the first batch of local government bonds issued after the system’s launch.
The local government bonds of Shanghai successfully issued by tender this time are a kind of Shanghai Government General Bonds, with the maturities of 3, 5, 7 and 10 years, and each maturity with the issuance amount of RMB6 billion, RMB6 billion, RMB9 billion and RMB9 billion, respectively, totaling RMB30 billion. It is learnt that the underwriting group of the bonds consists of 29 underwriters, including 6 securities companies, i.e., CITIC Securities, China Securities, Guotai Junan Securities, Orient Securities, GF Securities and China Merchants Securities. The underwriters in the category of securities companies actively participated in the subscription, with the total bidding amount of RMB9.9 billion, accounting for 33% of the issuance size; those in the category of banks boasted a total bidding amount of RMB20.1 billion, or 67% of the issuance size.
The successful launch of the MOF-SSE Government Bonds Issuance System and the smooth issuance of the Shanghai Government Bonds have opened a new issuance channel for local government bonds, which will help optimize the investor groups of local government bonds, and better fuel the growth of the local government bonds market and serve the local financial and economic construction.
