.jpg)
The Shanghai Stock Exchange (SSE) will conduct bond repayment on installments by reducing bond nominal value since today, with an aim to implement the requirement of the China Securities Regulatory Commission for developing the bond market, and improve efficiency of the business of bond repayment on installments.
According to a relevant announcement of the SSE, when bond issuers repay principal on installments, the bond positions held in the investors’ accounts will remain unchanged, with the nominal value of one lot of bonds reduced correspondingly. Besides, payable bond interests will be calculated according to the adjusted bond nominal value.
It is learnt that, when bond issuers repay part of the principal on installments, the SSE will calculate the opening reference price of the bond on the day for repayment on installments according to the formula of “opening reference price after repayment on installments = closing price before the day for repayment on installments – 100 * the ratio to be repaid this time”.
In order to avoid misleading bond investors, the SSE will carry out risk alert and education for investors from the following 3 aspects:
First, it will add “PR” before the names of bonds requiring repayment on installments by reducing nominal value for warning.
Second, the SSE requires its members to issue risk alert for investors in all ways.
Third, the SSE requires bond issuers to publish the “announcement on bond repayment on installments” before repaying in this way, in order to specify an array of issues, including record date, repayment scheme, calculation method for nominal value, method for adjusting opening reference price, and change of bond name’s abbreviation.
As China Government Securities Depository Trust & Clearing Co. Ltd. also reduces bond nominal value to repay on installments on the inter-bank bond market, this way of repayment will not only strengthen the SSE’s services for bond investors, but also facilitate interflow of the SSE bond market and the inter-bank bond market. Moreover, it is learnt that, the first bond involving repayment on installments will be "09 Changchun Urban Development (122982)", with its repayment ratio being 30% of the issuance amount, and the repayment day being March 10, 2014. According to relevant regulations, the nominal value of this bond will be reduced to RMB70 after repayment on installments. This bond will become the first one with the mark of “PR” on the SSE bond market.
