On May 16, SZSE launched the credit protection certificate that was jointly established by China Securities Finance Co., Ltd. (hereinafter referred to as “CSF”) and the special plan manager CITIC Securities Co., Ltd. It is matched with the “CITIC Securities - Linklogis - Xinlina No. 1 Supply Chain Financial Asset Support Special Plan (II)” (hereinafter referred to as the “Longfor Supply Chain ABS”) and has successfully completed bookkeeping. The total issue volume of the Longfor Supply Chain ABS is CNY 402 million, the interest rate for prior-class ABS is 3.50%, and the bid-to-cover ratio is 2.36. The underlying assets are the account receivables by 306 small and medium-sized suppliers in the upper stream of the supply chain from Longfor. The nominal principal of the matched credit protection certificate is CNY 40 million, and the issue volume of the protected underlying assets is CNY 400 million.
This credit protection certificate is the first credit protection instrument for private property developers on the market, which can help enhance the credit of private property developers in debt financing. Its successful establishment marks a new milestone in the development of innovative instruments designed to support private property developers in debt financing.
The “ABS plus credit protection certificate” financing solution is the first ABS credit protection certificate established with the participation of CSF. It is an innovation in credit protection instrument business. First, compared with the one-on-one credit protection contract, the credit protection certificate has better circulation and is more market-based in pricing. It has enhanced investor willingness to invest in Longfor ABS, helping small and medium-sized suppliers in the upper stream of the supply chain recover funds faster, reduce cost of funds and expand financing channels. Second, it has adopted the joint establishment model for issuance. By giving full play to the role of CSF as a core institution in the financial market, it can help pool market resources and further increase the financing support of the capital market to private enterprises.
Next, SZSE will firmly implement the decisions and plans of the CPC Central Committee and the State Council on supporting the development of private enterprises. We will follow the guidance of CSRC and work unswervingly both to consolidate and develop the public sector and to encourage, support and guide development of the non-public sector. We will make good and flexible use of market resources, promote innovation in services and products, and support more market institutions in participating in the credit protection instrument business for private enterprises in bond financing, to empower the healthy development of the non-public sector together.
