1st Cross-market Railway Bond Listed On Shanghai Stock Exchange

Culled—Proshare

June 14, 2018/The SSE 

China Railway Corporation successfully issued the 1st cross-market railway bond on June 6, with the total issuance size of RMB20 billion on the exchange and interbank bond markets, among which RMB10 billion is for 5-year products at the issuance rate of 4.46% and the other RMB10 billion for 20-year products at 4.78%. Banks, insurance companies, securities dealers and enterprise annuities are active in purchase in this cross-market issuance of railway bond. 

Warm response has been seen in the market, and new progress has been made in the interconnection among the bond markets. 

The railway bond has since been listed for trading on the Shanghai Stock Exchange (SSE) on June 11, 2018 having adopted the way of bidding, quoting, enquiry and contractual trading. It wasl open to the public investors and qualified investors, and is available for use for collateralized repo post listing, with the repo discount coefficient at 0.96. 

The SSE released the “Notice on the Listing and Trading of China Railway Construction Bond” and relevant supporting rules on June 1, 2018 (see below).

The cross-market issuance of the railway bond is a specific measure of the SSE to implement its strategic cooperation agreement with China Railway. 

Next, the SSE will continue to expand the investment subjects of the railway bond, improve the liquidity of the secondary market of the railway bond, optimize the exchange bond market structure, actively serve high-quality centrally-administered SOEs, take root in serving the real economy, and play the advantage of resources allocation. 

Business Rules for Railway Bond Released, Propelling Expansion of Diversified Financing Channels, Keeping Serving China Railway Construction

The Shanghai Stock Exchange (SSE) issued the “Notice on Relevant Matters over Listing and Trading of China Railway Construction Bond” (the “Notice” for short), which has specified the issuing, listing and circulation, information disclosure and continuous management for China railway construction bond (the railway bond for short). The move aimed to implement the strategic cooperation agreement between China Railway Corporation and the SSE, well prepare for the cross-market issuing and listing of the railway bond, expand its investment subjects, optimize the exchange-traded bond market’s structure, improve the liquidity of the secondary market of the railway bond, and enhance the capacity of the exchange-traded bond market in serving the real economy. 

The “Notice” first makes clear the listing and trading arrangement. It stipulates that the railway bond is subject to such business rules as the “SSE Trading Rules” and the “SSE Detailed Rules for Implementation of Bond Trading”. It adopts bidding, quoting, enquiry and contractual trading, opens to public investors and qualified investors, and can be used for collateralized repo after listing and to which the repo discount coefficient of government-backed debts is applicable. Secondly, the “Notice” stipulates the information disclosure in duration and relevant specific requirements. It requires an issuer to disclose such issues as the annual financial report, the matters to be disclosed as stipulated in the prospectus, and the key matters that might affect debt repayment ability, in addition to specifying the place and time limit for information disclosure. Thirdly, the “Notice” proposes the requirement of continuous management, making clear the requirement on announcing the issuer’s clauses involving rights in duration. Fourthly, it stipulates issues on registration, deposit, settlement, and interest and principal payment of the railway bond. Fifthly, it confirms that no service fee will be charged for the issuing and listing of the railway bond temporarily. 

Next, the SSE will further encourage qualified subjects or assets affiliated to China Railway Corporation to conduct bond financing and asset securitization on the SSE and boost investors to widely participate in the financing of China Railway Corporation, thus adapting to the financing need of the rapidly-developing China railway cause towards the capital market.

Related Documents and Links

·         PDF Relevant information regarding the public issuance of renewable …

·         Business Rules for Railway Bond Released, Propelling Expansion of … Jun 1, 2018

·         Shenzhen Stock Exchange

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