Wednesday, May 16, 2018 09.01AM / Shanghai Stock Exchange
In order to implement the strategic deployment of the CPC Central Committee and the State Council on poverty alleviation, and effectively enhance the support of the capital market for the tough battle on targeted poverty alleviation, according to the general requirements of the “Opinions of China Securities Regulatory Commission on Giving Play to the Role of the Capital Market in Supporting the State’s Poverty Alleviation Strategy”, the Shanghai Stock Exchange (SSE) has been vigorously carrying out relevant policies and requirements for targeted poverty alleviation.
Based on the experience in the earlier pilot programs, the SSE recently issued the “Q&A of Shanghai Stock Exchange on Regulation of Corporate Bond Financing - Special Corporate Bonds for Poverty Alleviation” (the “Regulation Q&A” for short), specifying the institutional arrangements for the support of the SSE bond market for the strategy of fight against poverty.
Adhering to the market-based and law-based concepts, with the orientation of the capital market toward boosting the economic and social development in the poverty-stricken areas, the “Regulation Q&A” gives a clear response to the hot issues in the market. First of all, the scope of the special corporate bonds for poverty alleviation (the “Bonds” for short) is identified.
The Bonds include not only the corporate bonds issued by the enterprises registered in the poverty-stricken areas, but also those characterized by the issuers who are not registered in poverty-stricken areas with the raised funds that are mainly used to construct, operate or acquire the projects of targeted poverty alleviation or repay the loans for the projects of targeted poverty alleviation.
The aforementioned poverty-stricken areas include the key counties included in the national plan for poverty alleviation through development, the counties in contiguous areas with particular difficulties, and the areas affected by extreme poverty (the three designated regions and the three designated prefectures). In order to implement the policy requirements for “extending the policy after overcoming the poverty during the tough battle period”, the corporate bonds issued by the enterprises registered in the poverty-stricken areas which have been out of poverty for less than three years can be recognized as the Bonds; secondly, the projects of targeted poverty alleviation available for investment of raised funds are listed, and it is required that for the use of the funds raised through the bonds in the projects of targeted poverty alleviation, the mechanisms for risk control and return on investment should be set up and improved.
In addition, it is stipulated that there is no requirement for approving the projects of targeted poverty alleviation so as to reduce the financing costs for the bond-issuing enterprises; thirdly, in order to meet the Bonds’ actual need for funds and advance the market-based financing for the projects of poverty alleviation, the “Regulation Q&A” specifies the requirement for the use of the raised funds that better meets the needs of the bond-issuing enterprises, so as to improve the efficiency of the use of the raised funds; fourthly, the “Regulation Q&A” details the SSE’s measures for supporting the application for issuance and issuance of the Bonds as well as the opening of the green channel for the review of the poverty alleviation bonds.
By the end of April this year, the SSE bond market supported a total of RMB14.6 billion in the issuance of the Bonds, including RMB9.5 billion of corporate bonds and RMB5.1 billion of asset-backed securities. The poverty-stricken areas where the bond-issuing companies are located have covered more than 10 provinces and municipalities in China, such as Guizhou, Anhui, Hunan, and Chongqing. The raised funds have been used in relocation for poverty alleviation, industry-based poverty alleviation, ecology-based poverty alleviation and other fields.
Going forward, on the basis of making effective efforts in risk control, the SSE will continue to improve the support of the bond market for the sustainable development in the tough battle on poverty alleviation as well as the issuance of the Bonds and the asset-backed securities, step up the promotion among the enterprises in the poverty-stricken areas, the intermediaries of the Bonds and the investors, and enhance the service of the capital market for the tough battle on the targeted poverty alleviation.