Securities Times | SSE Holds Bond Issuers Symposium to Support the Construction of the "Three Major Projects"

Translated from Securities Times

Recently, the Shanghai Stock Exchange (SSE) organized a symposium in Jinan, Shandong for bond issuers involved in the "Three Major Projects". Eight bond issuers attended the event, alongside representatives from the Shandong Office of China Securities Regulatory Commission (CSRC), Shandong Provincial Financial Regulatory Bureau, and Jinan Municipal Financial Regulatory Bureau.

The main objective of this meeting was to earnestly implement the spirit of the Central Financial Work Conference and arrangements of the CSRC. It aimed to further advance the construction of the "Three Major Projects" through bond financing, existing assets securitization, and other financing means. Participating enterprises expressed the need to actively adjust their development strategies in response to significant changes in the real estate industry's supply and demand dynamics. They also emphasized the importance of utilizing various financing tools in the bond market to explore path of transformation under the new development model.

Contributing to the construction of the "Three Major Projects"

In July 2023, the State Council Executive Meeting reviewed and approved the Guiding Opinions on Actively and Steadily Promoting the Construction of Public Infrastructure for both Normal and Emergency Use in Super-Large and Extra-Large Cities. Following this, several policy documents were issued, which specified the top-level design requirements for promoting the establishment of a new development model in the real estate sector. These documents further introduce policy arrangements to support the planning and construction of government-subsidized housing, renovation of urban villages, and building of public infrastructure for both normal and emergency use, which are known as the "Three Major Projects." The innovative approach and breakthrough compared to traditional infrastructure models have become crucial drivers for stabilizing infrastructure development and investment.

During the symposium, participating enterprises stated that the continuous promotion of the "Three Major Projects" is a significant deployment and requirement put forward in the Central Financial Work Conference. They will be committed to fulfilling their social responsibilities including exploring innovative and diversified financing channels, utilizing asset-backed securitization products, corporate bonds, enterprise bonds, and other bond tools to support the construction of the "Three Major Projects." Enterprises will also actively explore the use of tools such as real estate investment trusts (REITs) to revitalize existing assets such as public rental housing and other similar assets.

Some participating companies pointed out that the "Three Major Projects" adapt to new requirements in the new development model of the real estate sector, particularly in the face of significant changes in supply and demand dynamics. Enterprises are actively adjusting their strategies and transforming their previous operating models characterized by high leverage, high debt, and high turnover. They are actively participating in the construction of government-subsidized housing and researching pathways for transitioning to new development models.

Multiple measures in the bond market to meet financing needs

In recent years, the SSE has actively supported the financing needs of enterprises in the sector of government-subsidized housing construction. Since 2021, over 100 corporate bonds have been issued on the SSE market, raising nearly RMB 70 billion in total for government-subsidized housing projects.

A representative from the bond business at the SSE stated, "This year, the SSE has clarified from the institutional level its support for issuers engaged in construction business related to the 'Three Major Projects' to raise capital through the bond market. In practice, we have established a special working group to assess and meet the needs of various enterprises and projects. We actively encourage all types of enterprises to issue corporate bonds, including enterprise bonds, while fully utilizing asset-backed securitization and REITs products, effectively using bond market tools to meet the reasonable financing needs of enterprises."

To date, the SSE has approved four government-subsidized rental housing REITs, three of which are listed, while one has been approved but not yet issued. Since 2022, a total of 16 government-subsidized housing asset-backed securities (ABS) have been listed and traded on the SSE, with a total financing scale of RMB 14.8 billion. This has helped revitalize the existing assets of companies related to government-subsidized rental housing.