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On December 14, SZSE's first support instrument for private enterprise bond financing was successfully issued. SZSE earnestly implements the principles and policies of the CPC Central Committee and the State Council and the deployment requirements of CSRC. This issuance is another important measure taken by SZSE after its pilot of the first batch of credit protection instruments to support private enterprises' bond financing in a market-based way and solve their difficulties in bond issue through the exploration of using mature credit enhancement instruments.
People's Bank of China provides partial initial funds for such supporting instruments by re-lending, while China Securities Finance Co., Ltd. (CSF) conducts market-oriented operations. By selling credit protection contracts, private enterprises equipped with favorable market shares, prospects, technology, competitiveness, as well as transparent and standardized information disclosure are provided with credit enhancement support. Accordingly, such instruments help enterprises get financing in a market-based way.
SZSE's first support instrument for private enterprises' bond financing was jointly issued by CSF and GF Securities Co., Ltd., involving a nominal principal of CNY40 million. With Guangzhou Zhiguang Electric Co., Ltd. as the reference entity, the first instrument was placed together with the issuance of corporation bonds "18 Zhiguang 02". Because of the simultaneous placement, investors had high recognition of the "18 Zhiguang 02" corporate bonds and the market response was good. The bond interest rate was 6.8%, 96BP lower than the average rate of the market's comparable bonds in the same period. The financing cost for the enterprise was also lower than its comprehensive cost of bond financing in recent years, which has injected long-term stable funds for its development.
An SZSE officer expressed that by realizing the improved allocation of credit risks among market participants, this issuance guides the market to enhance the confidence of bond investing in high-quality private enterprises and promotes the continuous financing of private enterprises' bonds. On the basis of previous pilot experience and under CSRC's unified deployment, SZSE will formulate business rules for issuing credit protection tools and gradually expand the coverage of bond financing support instruments for private enterprises. The goal is to use the way of targeted "drip irrigation" to build a long-term mechanism of precise support, improve the financing environment of private enterprises and strive to improve the efficiency of finance to serve the real economy.
