LOCATION: SZSE English/ABOUT/News/SZSE News

First Batch of Pilot Credit Protection Certificates Are Successfully Issued via SZSE

Date: 2020-12-03

The first batch of credit protection certificates was successfully issued via SZSE under a pilot program on December 2, marking the official launch of SZSE’s credit protection certificate business. It is another useful exploration of SZSE to earnestly implement the decisions and plans of the CPC Central Committee and the State Council, actively employ market-oriented means to support private enterprises’ direct financing, effectively maintain healthy, stable development of the exchange’s bond market, and give better play to the role of the capital market in serving the real economy under the unified leadership of China Securities Regulatory Commission.

 

The first batch of the three credit protection certificates are created and issued by Guotai Junan Securities, CITIC Securities and China Merchants Securities, with a total notional principal of CNY 71 million. The reference entities are TCL Technology Group Co., Ltd., Lionbridge - CITIC Securities Shengguan Asset –backed Special Plan (2nd Tranche), and Huanneng Guicheng Trust - China Merchants Securities - Muyuan Huirong Supply Chain Asset-backed Special Plan (2nd Tranche). The protected debts cover corporate bonds and asset backed securities, and the buyers of the certificates include investors from the primary and secondary markets of the protected debts.

 

All of the subjects of the protected debts in the first batch of credit protection certificates are private enterprises. The creation of the certificates has effectively raised investors’ motivation for subscribing and holding private enterprises’ bonds, helping them reduce financing costs and improve financing efficiency. By creating and issuing credit protection certificates with TCL Technology Group Co., Ltd. as the reference entity, Guotai Junan has helped bond holders release credit to invest in new private enterprise bonds. The assets underlying the protected debts of the credit protection certificates issued by CITIC Securities are lease loans granted by Lionbridge Financial Leasing to about 3,500 small transportation enterprises and self-employed carriers. The actual use of the funds for the protected debts of the credit protection certificates created by China Merchants Securities is to make procurement payments to small and medium-sized suppliers in the upstream of Muyuan’s supply chain and help micro, small and medium-sized enterprises obtain financing support.

 

In recent years, SZSE has been continuously deepening reform and innovation in the bond market and diversifying products and services. In November 2018, SZSE launched the pilot program of credit protection contracts. On the basis of the smooth operation of earlier credit protection contracts, SZSE officially issued the Notice on Implementing the Pilot Program of Credit Protection Certificate Business in October 2020 to involve more market institutions in the business of credit protection tools. So far, SZSE has helped 14 private enterprises obtain CNY 18 billion financing with credit protection tools. Next, SZSE will continue to guide market institutions to issue credit protection certificates in an orderly manner and steadily expand the scope of the pilot program. SZSE will establish and refine market systems, improve the technical guarantee system, and further leverage the supporting role of innovative financial instruments in expanding entities’ financing channels and raising the proportion of direct financing. SZSE will properly guard against risks when seeking development, and help improve the operating quality and efficiency of the exchange’s bond market.

It is another useful exploration of SZSE to earnestly implement the decisions and plans of the CPC Central Committee and the State Council, actively employ market-oriented means to support private enterprises’ direct financing, effectively maintain healthy, stable development of the exchange’s bond market, and give better play to the role of the capital market in serving the real economy under the unified leadership of China Securities Regulatory Commission.