To implement the national innovation-driven development strategy and improve the mode of the bond market serving the real economy, the Shanghai Stock Exchange (SSE), the Shenzhen Stock Exchange (SZSE), National Equities Exchange and Quotations Co., Ltd. (NEEQ) and China Securities Depository and Clearing Co., Ltd. (CSDC), under the unified arrangement of the China Securities Regulatory Commission (CSRC), jointly published on September 22 the “Detailed Rules for Implementing the Business of Non-public Issuance of Convertible Bonds of Innovative Startups (Trial)”, which has drawn much attention in the market and received active response from all market participants. With the concerted efforts made by the SSE, NEEQ, the lead underwriters and relevant intermediaries, the SSE successfully issued the first batch of innovative startups' convertible bonds on October 16.
The issuers of the convertible bonds issued upon approval are Suzhou Vortex Information Technology Co., Ltd. and Suzhou Jcon Building Technology Co., Ltd., both of which were underwritten by Soochow Securities. Both of the companies are in their growth stage as the national high-tech enterprises listed on the innovation sector of NEEQ. Specifically, Vortex issued RMB40 million of bonds with the interest rate of 4.00% and the term of 1 year, which can be converted to shares after 6 months starting from the date of the end of the issuance, with the initial conversion price at RMB30.60 per share; Jcon issued RMB10.6 million of bonds with the interest rate of 6.50% and the term of 4+2 years, which can be converted to shares after 6 months starting from the date of the end of the issuance, with the initial conversion price at RMB5.30 per share. The issuance by the two companies will provide them with important support of funds for their sustained innovation and development, and result in good demonstration effect, driving the issuance of convertible bonds by the innovation sector on the New Third Board and other innovative startups.
The development of innovative startups' convertible bonds is an important measure to improve the support of the capital market for the national innovation-driven strategy and implement the supply-side structural reform. It is also an innovative means for the exchange-traded bond market to enrich the bond product line and serve the real economy. The convertible bonds of innovative startups are conducive to expanding the financing channel for the enterprises, diversifying the ways of financing, reducing the financing costs, standardizing the financing behaviors of the innovative startups through the standardized financing instruments and improving the corporate governance; on the other hand, the bonds can also provide investors with more investment options and exit channels, thus improving the market attraction of the bonds of the innovative startups.
In the future, under the leadership of the CSRC, the SSE will continue to implement the requirements for the reform of the investment and financing system, give full play to the role of the exchange-traded bond market in supporting the hi-tech growth enterprises and serving the real economy, and further explore the new models of bond market service and support for the development of the innovative startups.