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ICBC Launched the First Batch of Bond Financing Instruments for Private Enterprises

Three bond financing supportive instruments for private enterprises with Industrial and Commercial Bank of China (ICBC) as the lead underwriter and the founding institution for Credit Risk Mitigation Warrant (CRMW) were officially announced on November 6, making them the first batch of projects implemented by a large state-owned holding bank since the People’s Bank of China’s initiative to encourage bond financing supportive instruments for private enterprises.

It is introduced that the three instruments are: the 18 Zhengtai SCP001 CRMW jointly created by China Bond Insurance Corporation and ICBC, with the creation value of no more than RMB150 million and debt issuance value of RMB300 million, from which the funds raised will be used to repay the stock financing; and the 18 Yingfeng CP001 CRMW and the 18 Zhujiang Touguan SCP003 CRMW, independently created by ICBC with the creation value of no more than RMB350 million and no more than RMB250 million respectively and debt issuance value of RMB700 million and RMB500 million respectively. The funds raised will be used to repay the stock financing and to supplement the working capital.

Insiders said that by jointly and independently creating CRMWs, ICBC intended to offer credit protection for private enterprise bonds. This was an active application of policy tools following the market-oriented principle, playing a positive role for stabilizing market expectations and improving the credit environment for the bond market of private enterprises.

Statistics shows that ICBC has played a leading role in supporting private enterprises in recent years. As at the end of September, up to 79,000 private enterprises have financing balance in ICBC, up 11% over the beginning of this year and accounted for 77% of the total number of the financing corporate customers. The financing balance was approximately RMB2 trillion and the average loan interest rate stood at 5.2%. Besides, ICBC recently held signing ceremonies with 100 backbone private enterprises at headquarters level and cooperated with some of them in market-based and legalized debt-for-equity swap.