On October 18, China's first project revenue corporate bond issued by Shaanxi Province Tourism Group Yan'an Cultural Tourism Industry Investment Co., Ltd. was successfully listed and transferred on the Shanghai Stock Exchange (SSE). The funds raised through the corporate bond will be mainly used for the construction of the Golden Yan'an Project in Yan'an Holy Land Valley Cultural Tourism Industrial Park of Shaanxi Province. Shaanxi Province is the new starting point for the "Silk Road Economic Belt" in China's Belt and Road initiative. The successful issuance, listing and transfer of the corporate bond marks the official implementation of the first project revenue corporate bond under the unified deployment of the China Securities Regulatory Commission (CSRC), and also indicates the further improved capacity of the SSE for supporting the Belt and Road initiative.
In this issuance, the non-publicly issued project revenue corporate bond (phase 1) issued by Shaanxi Province Tourism Group Yan'an Cultural Tourism Industry Investment Co., Ltd. in 2017 was underwritten by Northeast Securities Co., Ltd., with the basic size at RMB300 million, the over-allotment of less than RMB700 million, and the final issuance size at RMB350 million; the term of the bond is 10 years, with the option attached for the issuer to adjust the nominal interest rate and the investors to sell back at the end of the fifth year in the duration of the bond, and the issuance was totally the off-line non-public offering to qualified investors in the form of bookkeeping. From the perspective of the issuance interest rate, the face interest rate of the bond is lower than those of the ordinary corporate bonds with the same term and the same rating, showing high recognition in the market.
All the funds raised through the project revenue corporate bond will be used in the investment, construction, operation and management of the phase 1 Golden Yan'an comprehensive development and construction project in Yan'an Holy Land Valley Cultural Tourism Industrial Park. With abundant historical, cultural and landscape resources, Shaanxi Province is also the new starting point for the "Silk Road Economic Belt" in China's Belt and Road initiative. The project of Yan'an Holy Land Valley Cultural Tourism Industrial Park is an important part of the rejuvenation program for the key national zone of red tourism in the Shaanxi-Gansu-Ningxia old revolutionary base area. The issuance of the project revenue corporate bond will play an important role in advancing the construction of the Belt and Road initiative and enhancing the output of China's cultural resources.
The project revenue bond is a subordinate product under corporate bonds and complies with the current rules for corporate bonds in terms of audit procedure, issuance mode, listing and trading, investor suitability, registration and trusteeship, clearing and settlement, supervision and management and legal liability. Those qualified for issuing the corporate bonds can issue the project revenue bonds, with the raised funds used in the investment, construction, operation or acquisition for the projects, and the operational cash flow produced by the project as the main source for debt repayment. With the project's financing demand, use of funds and project earnings taken into comprehensive consideration, the innovative bond product achieves the integration of “borrowing, using and repaying”, expands the new channels of project financing for enterprises, and solves the problem of mismatch of project period and financing term, while enriching the functions of the exchange-traded bond market and advancing the healthy development of China's multi-level capital market.
Going forward, in accordance with the overall arrangement of the CSRC, the SSE will further improve the rules for the project revenue corporate bonds on the basis of the SSE's financing systems for the asset-backed securities and corporate bonds, strengthen the development of supporting systems, step up the reserve of the projects, especially the projects along the “Belt and Road” and the PPP projects encouraged by the Ministry of Finance of the PRC and the National Development and Reform Commission, and strive to provide the full-process, all-chain and seamless financing service for quality projects that are to be constructed, under construction and completed in China.