XPCC Bond Debuts on the Exchange Market SZSE Achieves Notable Results in Serving the Issuance of Local Government Bonds in 2019
Date: 2019-12-23
On December 19, Xinjiang Production and Construction Corps (“XPCC” hereinafter) government bond debuted on the exchange market and succeeded in its open issue by tender on SZSE. This is an important measure for SZSE to study and implement the guiding principles of the Central Economic Work Conference and to support improvement of quality and performance with proactive fiscal policy. It is also another successful case to help broaden direct financing channels and serve the high-quality economic development of the border areas.
The XPCC bond includes one tranche of general bond and three tranches of special bonds, totalling a scale of CNY20.666 billion. The funds raised are mainly used for the expenditure of projects such as agriculture, forestry, water conservancy, rural public services, ecological construction and environmental protection, science, education, culture, health, government subsidized housing and municipal infrastructure within the jurisdiction of XPCC. It is conducive to upgrading infrastructure in the border areas, promoting the development of people’s wellbeing, and improving the living standard of people. The result of bond issue is: a total of CNY1.666 billion was the scale of 7-year general bond (interest rate of 3.41%), a total of CNY1.066 billion for 7-year special bond (interest rate of 3.41%), a total of CNY1.927 billion for 20-year special bond (interest rate of 3.78%), a total of CNY16.007 billion for 30-year special bond (interest rate of 4.05%). The subscription indicates that 32 financial institutions in the underwriting group have actively bid for a total of CNY163.72 billion. Among them, the total bid amount from the members of the underwriting group of securities companies reached CNY96.85 billion. They won the bid of CNY6.42 billion, accounting for 31.07% of the issuing scale.
In 2019, SZSE made continuous headway into the reform and development of bond market and focused on improving the service of municipal bond issuance. All this has produced remarkable results. First, SZSE further expanded its service coverage to contribute to the steady growth of the local economy. So far, SZSE has issued government bonds for 32 issuers in the way of issue by tender, with an accumulated issuance volume of nearly CNY1.8 trillion. In 2019, CNY881.7 billion of bonds was issued, involving 12 new issuers. The influence of the market of SZSE-listed municipal bonds is growing. Second, SZSE established a whole-process service system for special bonds to support the market-oriented reform of municipal bonds. According to the needs of issuing bodies, SZSE sent assistant personnel to cooperate with the field selection and evaluation of service projects in the issuance process of government special bonds with self-balancing project income and project financing. What’s more, we also provided market-oriented operation suggestions for issuers according to the experience on corporate credit bonds. Our integrated service capability has been fully recognized by the market participants. Third, SZSE intensified efforts on the building of buyer’s market to unleash investors’ vitality in the market. In 2019, SZSE has listened to the front-line opinions of the market from banks, fund companies, securities firms, insurance companies and other municipal bond investment institutions, so as to explore new ways to upgrade the mechanism for municipal bond investment and trading, and promote the improvement of the maturity types of municipal bonds. Fourth, SZSE pushed forward the innovation in government bonds and the launch of ETF products to enrich product supply. SZSE made further progress in exploring new ways of issuing municipal bonds such as serial issue, option bonds issue, rolling-over issue, and super long-term maturity issue. We have launched the first batch of the Guangdong-Hong Kong-Macao Greater Bay Area special municipal bonds to better support the building of the Greater Bay Area and the Pilot Demonstration Area. We actively explored new municipal bond ETF products to boost the liquidity of municipal bond market, thus resulting in the issuance and list of the first 5-year municipal bond ETF.
Next, SZSE will speed up the implementation of the task in deepening sweeping reforms of capital market, increase support for areas in line with national strategies and industrial policies, and deepen all-round cooperation with local governments. In addition, we will also provide enriched product systems, higher market efficiency and upgraded services. SZSE will further bring the functions and advantages of the exchange bond market in serving the real economy into full play, and pursue progress in high-quality development of the exchange bond market.
