The Shanghai Stock Exchange (SSE) released the Guidelines on Optimized Financing Regulation and Continuous Financing Regulation on Corporate Bonds (the “Guidelines” for short) lately, which aimed to implement the requirements of the 19th CPC National Congress and the strategic deployment of the Central Economic Working Conference, vigorously support the financing and transformation of high-quality enterprises, promote the orderly development of the exchange-traded bond market, and bring into fully play to the capacity of serving the real economy.
For the major contents of the Guidelines, an SSE official answered the questions raised by reporters.
1. What are the background and institutional arrangement of implementing the optimized financing regulation on corporate bonds?
The optimized financing regulation is a key measure and a regulatory innovation of the SSE to carry out classified regulation on issuers of corporate bonds. According to the overall national requirements of deepening reforms to streamline government administration, delegate more powers and improve service as well as promoting high-quality development, the SSE will, under the unified deployment of the China Securities Regulatory Commission (CSRC), streamline the examination on the application for issuing corporate bonds by any company that has high recognition on the market, prominent status in the industry and stable management and operation and has conducted bond financing for many times in the bond market. In this way, high-quality issuers can finance through the corporate bond market more independently and conveniently according to their own financing needs, thus giving full play to the market’s decisive role in resources allocation. And it will also help to optimize the structure of the exchange-traded bond market and enhance the bond market’s capacity of serving the real economy.
For issuers qualified for optimized financing regulation, the green bonds, poverty alleviation bonds, exchangeable bonds and other kinds of bonds issued by them can be applied in one application document, and the specific bond variety, issuance scheme and use of raised funds of each term can be made clear in the issuance registration stage, which will reduce the uncertainty of the issuing time caused by such problems as the use of raised funds. The information disclosure can be simplified in the application document through information indexing. An issuer can set up a principal underwriter group in the application stage and designate a principal underwriter for each term of issuance in the issuance stage. For public issuance, the SSE will further increase the pre-examination efficiency with the examination time of no more than 10 workdays, and the issuer can organize one-time or installment issuance after receiving the approval from the CSRC; for non-public issuance, an issuer can determine issuing elements directly after choosing the issuing time, and the issuer then submit the application document to the SSE in the registration stage before the issuance, and the issuance can be conducted after the SSE confirms its listing conditions. The confirmation of the listing conditions has been greatly simplified.
2. What are the SSE’s arrangements of financing regulation on the re-application of the issuer that has issued corporate bonds before?
The re-application of the issuer that has issued corporate bonds before (the “continuous financing” for short) represents an important way to realize the rolling and continuing of debts, and it closely meets the enterprises’ manufacturing and debt management needs. The SSE will support qualified issuers to apply for the continuous financing of corporate bonds. Different from the 1st application of corporate bonds, for continuous financing, a financing regulation mechanism should be established in accordance with the duration regulation and credit risk management of an enterprise’ issued corporate bonds, so as to enhance the pertinence of the financing regulation, make the continuous financing channels more smooth for corporate bond issuers, bring convenience for the enterprise’ liquidity management and earnestly serve the real economy.
With more issuers choosing corporate bond financing, the continuous financing has gradually become a major means of corporate bond financing. Continuous financing regulation has further made clear and improved the corporate bond financing regulation under the existing framework, and it is a differentiated financing regulation according to the credit of the issuer and the risk classification on existing bonds. First, it will cooperate with high-quality issuers in implementing their financing plan, examine according to the optimized process, and guarantee the financing service and enhance the financing efficiency; second, it will carry out examination according to the existing process for ordinary issuers, assist them in raising redemption funds, and carry out bond redemption; third, it will set up a special examination mechanism for the issuers with credit risks on existing bonds being concerned, so as to enhance the pertinence and efficiency of the examination, help enhance the redemption capacity of the issuers that operate normally and have development prospects but with problem in short-term liquidity, thus preventing credit and liquidity risks.
A principal underwriter and a trustee should strengthen the coordination on the front-end project application and the risk management in duration and assist qualified issuers in applying for the continuous financing of corporate bonds. A principal underwriter should establish and improve its internal mechanism, strengthen the efforts on investor communication and cultivation, enhance the sales capacity, and guarantee the issuing of corporate bonds for continuous financing. Qualified investors are encouraged to invest in corporate bonds for continuous financing under the basis of full research, thus helping relieve the financing difficulty and high cost of the private enterprises and the small and medium-sized enterprises.