Bonds May 23

Shanghai pilot scheme for short-term corporate bonds

Companies applying for public issues of short-term corporate bonds which are listed on the SSE should have good short-term solvency

Shanghai pilot scheme for short-term corporate bonds
Image: iStock

(ATF) The Shanghai Stock Exchange issued a notice to say it is launching “Pilot Short-Term Corporate Bond Issuance" this month – May 2020 – to expand corporate financing channels, reduce the cost of financing and meet corporate mobility fund management needs, according to the Securities Law, Corporate Bond Issuance and Trading Management Measures, other regulations and the exchange's business rules.

The notice said groups applying for public issuance of short-term corporate bonds who are listed on the Shanghai Stock Exchange should have good short-term solvency.

During the period for the pilot scheme, short-term corporate bonds will only issued to professional investors, and the scope should meet one of the following – suitable average net cash flow from operating activities over the past three years (that means the quick ratio at the end of the most recent year should greater than the first).

Securities companies with comprehensive strength and sound internal control and risk control systems and other issues will be considered to for approval by the Shanghai Stock Exchange.

The period for publicly issuing short-term corporate bonds is one year or less, and the specific period is determined by the issuer based on the production and operation of capital requirements and market conditions. 

The purpose of the funds raised for short-term corporate bonds should be reasonably matched with the maturity of the bonds.

If the issuer’s credit rating is adjusted to below AA (excluding), the adjustment of the public short-term corporate bond transaction method and related matters will be handled differently, it said.