.jpg)
To improve capability of the SZSE bond market to serve national strategies and the real economy and to diversify the investors in China Railway Construction Bond (hereinafter as the “Railway Bond”), SZSE has completed preparations for the listing of Railway Bond under guidance of the National Development and Reform Commission and the China Securities Regulatory Commission. On June 1, SZSE officially released the Notice on the Listing and Trading of China Railway Construction Bonds to clarify arrangements for the listing on SZSE. The first tranche of the Railway Bond is expected to be issued in early June to raise CNY20 billion.
The Ministry of Railways issued four tranches of bonds via SZSE in 1997 and 2006 respectively. After the Railway Bond was defined as government-backed bonds under the approval of the State Council in 2011, there were no new issues of such bonds via stock exchanges since then. The Railway Bonds that return to the SZSE market are guaranteed by the railway construction fund and enjoy preferential policies including one that halves the interest income tax for investors in government-backed bonds.
The listing of Railway Bond on SZSE will support trading by competitive bidding and trading by agreement. The bond may serve as collateral under SZSE bond pledged repo transactions, with a discount coefficient defined according to regulations for government-backed bonds (currently set as 0.96). As a cross-market trading product, Railway Bond listed on SZSE shall comply with the same disclosure requirements as those for interbank markets. In the meantime, SZSE and China Securities Depository and Clearing Corporation Limited will provide one-stop services for its registration and listing. For shares deposited in SZSE upon issuance, they will proactively coordinate with all parties and arrange for listing as soon as the issuance is completed, therefore speeding up the registration.
The return of Railway Bond to SZSE benefits both parties. For China Railway Corporation, the listing of the bond on SZSE diversifies investors, improves liquidity in the secondary market, and enhances its proactive debt management capabilities. For the SZSE market, the listing further enriches bond products in the market, optimizes the product structure, and increases the percentage of rate securities. This will significantly improve capability of the SZSE bond market to serve national strategies and the real economy.
Next, SZSE will continue to implement the three major tasks of “serving the real economy, preventing and controlling financial risks, and deepening financial reforms”. Under the leadership of China Securities Regulatory Commission, SZSE will conscientiously implement new development concepts and give full play to the capital market’s functions and advantages in optimizing market resource allocation, supporting national strategies, facilitating economic transformation, and serving the mass public. SZSE shall fully carry out the tasks of supporting the Chinese railway construction, and promote quality development of railways in China.
