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In order to fully implement the guiding spirit of the CPC 19th National Congress and play the role of serving the “Belt and Road” (B&R) with its bond market, Shenzhen Stock Exchange (SZSE), under the leadership of China Securities Regulatory Commission (CSRC), has closely centered on the national “Belt and Road Initiative” and put equal stress on “bringing in” and “going out” to boost the B&R financing. On 02 March 2018, SZSE released the Notice of Shenzhen Stock Exchange on Developing the “Belt and Road” Bond Business Trial (“the Notice”), supporting the investment and financing via SZSE’s bond market by the governmental organizations and quality enterprises in China and the countries (regions) along the “Belt and Road.”
The full Notice contains 12 articles and goes into effect since the day of release. Generally, the Notice is of the following four characteristics:
First, the scope of the “B&R” bonds is specified. According to the Notice, SZSE classifies the “B&R” bonds into three classes. Class I is the government bonds issued on SZSE by the governmental organizations of the countries (regions) along the “Belt and Road.” Class II is the corporate bonds issued on SZSE by the enterprises and financial institutions of the countries (regions) along the “Belt and Road.” Class III is the corporate bonds issued on SZSE by overseas enterprises to raise funds for the “B&R” construction.
Second, arrangements on the issuance, listing process and information disclosure of the “B&R” government bonds are defined. According to the Notice, an issuer of “B&R” government bonds shall submit relevant documents to SZSE for issuance preparation and disclose information accordingly. The bond trading or transfer via listing follows SZSE’s existing trading business rules. Within the bond duration, the issuer shall perform disclosure obligation in the case of annual economic data and major events.
Third, conditions of the corporate bond project for the “B&R” construction and requirements on the use of raised funds are spelt out. The Notice stipulates that the raised funds of “B&R” corporate bonds shall be used in investing, constructing or operating “B&R” projects, repaying the special interest-bearing debts incurred from “B&R” projects, or developing businesses in the countries (regions) along the “Belt and Road.” “B&R” projects shall be programs that are identified by provincial or higher-level National Development and Reform Commission (NDRC) departments or other national functional departments or that are established through signed agreements by the issuer with the governmental departments or enterprises in the countries (regions) along the “Belt and Road”, approved by competent regulatory institutions and conformed to the “Belt and Road Initiative.” To achieve more flexible use of the raised fund of these bonds and under the premise of meeting the aforesaid conditions, the Notice allows the use of less than 30% of the raised funds for supplementing working capital and repaying bank loans.
Fourth, relevant supporting facilities are established. SZSE will not only assign dedicated personnel to take charge of accepting and reviewing bond declaration and unifying the identification of bond names, but also set a special column to release “B&R” bond indexes from time to time, thus encouraging institutional investors to invest in the “B&R” bonds.
Ever since the Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road issued by NDRC, Ministry of Foreign Affairs and Ministry of Commerce, the “B&R” construction has been transformed from a concept to action and from vision to reality. In particular, infrastructure interconnection is a priority construction field in the “Belt and Road Initiative.” By closely following national development strategies, SZSE has focused on exploring an innovative investing and financing model of guiding financial flows to support the “B&R” construction, with many “B&R” bond trial projects successfully launched. China Merchants Ports Holdings Co., Ltd. and Iowa China Offshore Holdings (Hong Kong) Limited successfully issued on SZSE the first-batch “B&R” panda bonds totaling CNY1.7 billion. The raised funds of the two bonds are of cross-border use for acquiring the equity of Hambantota Habour, Sri Lanka and the logistics infrastructure assets along the European line respectively. This has truly served the “B&R” financing and regional infrastructure construction, smoothing the implementation of China’s “Belt and Road Initiative.”
An SZSE principal said that the Notice is an important move based on SZSE’s experience in the preliminary “B&R” bond business trial for the sake of further carrying out national strategic deployment, extending characteristics service chains and propelling the “Belt and Road Initiative.” The successively to-be-issued “B&R” bonds will steadily expand the opening-up of financial market, enhance international exchange and cooperation, and further enrich the current financial product system. Next, SZSE, by keeping following CSRC’s deployment and taking the opportunity of releasing the Notice, will intensify the efforts on promoting and publicizing the “B&R” bond business through multiple channels, constantly accumulate and summarize the trial experience, and continue to refine and perfect relevant rules and supporting facilities so as to steadily amplify SZSE’s scale advantage in “B&R” bond financing, enhancing SZSE bond market’s capability of serving the “Belt and Road”, and powering the construction of the capital market featuring a fully open-up new pattern.
