(ATF) Shenzhen Metro Group has become the first company to go through China's 'streamlined' bureaucratic processing – being done online – and under the new Securities law that is now in effect. Over 100 more are expected to follow in the near future.
Shenzhen Metro Group successfully issued China's first registered corporate bond at the Shenzhen office of the Central Government Bond Registration and Clearing Company yesterday, April 23.
The total issuance amount is 6 billion yuan (US$847.5 million). Half of that is a 7-year bond with a coupon rate of 3.46%, and the other 3 billion yuan is a 3-year bond with a coupon rate of 2.39%. The subscription multiples of the bonds were 3.07 and 3.88, respectively.
At the beginning of April, Shenzhen Metro Group Co Ltd applied to register a total of 20 billion yuan worth of corporate bonds. That was approved by the National Development and Reform Commission (NDRC), and they became the first batch of corporate bonds to receive registration after the implementation of the new Securities Law.
According to Xin Jie, chairman of Shenzhen Railway Group, the first registered top-level corporate bonds were done in Shenzhen. This, he said, demonstrated the determination and strength of the state to support Shenzhen in accelerating the construction of the Guangdong-Hong Kong-Macao Greater Bay Area, and commemorate the 40th anniversary of the establishment of the Shenzhen Special Economic Zone.
The 6-billion yuan of bonds were issued by four main underwriters – CITIC Securities, Haitong Securities, Huatai United, Guotai Junan, plus China Development Bank Securities.
The 3-billion yuan of 7-year bonds will be used to raise funds for rail transit projects.
In a statement the firm said: “The successful issuance of Shenzhen Metro’s first national registered corporate bond is a powerful attempt by Shenzhen Railway Group to explore the use of capital markets to serve the development of the real economy.“
Baoan Daily reported on March 1 the National Development and Reform Commission had made it clear that corporate bond issuance would have to under a full registration process, and it set up a regulatory concept to cover information disclosure.
The Commission said it would simplify application procedures and streamline the application process, to help expand the corporate bond market and reform of the bond market so that it develops in a healthy manner. With the implementation of this registration system, by April 20, about 140 companies have declared their intent to issue corporate bonds. Shenzhen Metro Group's 20-billion-yuan issue of corporate bonds is the first car off the rank.
Shenzhen's role in a multi-trillion-yuan market
In recent years, the Shenzhen Municipal Government has attached great importance to the expansion and innovation of the bond market, giving full play to the core functions of corporate bonds to serve the real economy, and play an important role in stabilizing growth, promoting reform, restructuring, and benefiting people’s livelihoods.
Shenzhen Metro Group is the main force in infrastructure construction in Shenzhen, and is also a major body for high-quality corporate bonds. The funds raised from this bond issue will be invested in urban rail transit, engineering construction and other fields. They should help promote the transportation network in the Greater Bay Area, as well as accelerate the construction of new intercity rail projects, and alleviate shortcomings in the infrastructure sector. They should also help upgrade regional industries.
The CCDC Shenzhen Center provided support for the latest bond issue. It also provides full-service such as project counselling, acceptance review, customer service, operational support, and market promotion.
The CCDC is an enterprise bond acceptance review agency, a centralized issuance site and general registration custodian authorized by the National Development and Reform Commission.
As of the end of 2019, the CCDC registered and managed various financial assets totalling over 118 trillion yuan, and bonds accounted for about 65 trillion, which is about 80% of the national bond market.