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May 28, 2021

Chinese Dollar Bond Market and Credit Analysis Forum in Jiangsu

On 27 May 2021, the Chinese Dollar Bond Market and Credit Analysis Forum jointly organized by China Chengxin International (CCXI), China Chengxin Asia Pacific (CCXAP), and Guotai Junan International was successfully held in Nanjing, Jiangsu. Hundreds of representatives from CCXI, CCXAP, Guotai Junan International, Jiangsu Development and Reform Commission, Bank of Jiangsu, Moody’s, Fangda Partners, and the issuers of Jiangsu region attended the event.

 

In recent years, the issuance of offshore dollar bonds has become one of the important financing channels for Chinese enterprises, driven by the declining US Treasury yields and the widening spread between China and US bonds. In 2020, the Chinese dollar bond market had ups and downs. In 2021, the frequent occurrence of credit events and the rise in US Treasury yields caused fluctuations in the market. Looking ahead, given the advancement of the COVID-19 vaccination program and the gradual recovery of global economic activities, US long-term Treasury yields may continue to rise and the offshore financing cost may increase. The guests at the meeting conducted in-depth discussions regarding the following topics. What is the future trend of the Chinese dollar bond market? What are the key issues concerned by Chinese enterprises when issuing bonds in the offshore market? What are the international procedures and key points for offshore bond issuance?

 

 

The meeting was hosted by Shao Jinhong, CEO of CCXAP. Yan Yan, Chairman and President of CCXI, and Liang Zhongwei, Director of Foreign Investment Division of Jiangsu Development and Reform Commission, made keynote speeches. Yan said that the offshore dollar bond market is an essential financing channel for Chinese enterprises. In 2020, the market was highly turbulent and credit events occurred frequently. However, the financing cost of dollar bonds remained relatively low which was attractive to the Chinese issuers.

 

Liang agreed with the Chinese dollar bonds as an important financing channel. He said that the Development and Reform Commission would continue to stimulate policies and other guidelines to serve offshore financing of Chinese enterprises.

 

Huang Han, Executive Director of Fixed Income Department, Guotai Junan Hong Kong, delivered a speech titled “Development of Chinese Offshore Bond Market in a Post-Pandemic Era”. She introduced the recent evolving global capital market, as well as the Chinese dollar bonds and its latest development.

 

Zhang Guo, Managing Director of CCXAP, delivered a speech titled “Market Environment and Credit Analysis of Chinese Dollar Bonds”. She focused on the characteristics of Chinese dollar bonds in the Jiangsu region and introduced the rating methodology of CCXAP. She especially analyzed the details of the Chengtou industry, in terms of policy evolution, development pattern, and rating methodology.

 

Gao Ming, Head of Cross-Border Marketing of International Business Department, Bank of Jiangsu, delivered a speech titled “Introduction to Bank of Jiangsu Offshore Bond Business”. He mentioned the advantages of Chinese offshore bond issuance, in terms of the continuous demand. Meanwhile, he explained the comprehensive services for offshore bond issuance from the perspective of commercial banks.

 

Ivan Chung, Associate Managing Director of Corporate Finance Department, Moody’s, delivered a speech titled “Applicable Methodology for Chinese Local Government Financing Vehicles”. He introduced the rating process and rating scope of Chengtou, and shared Moody’s rating methodology for Chengtou companies.

 

Liao Changyu, partner of Fangda Partners, delivered a speech titled “Overview of Chinese Offshore Bonds Issuance”. He provided a detailed explanation of Chinese offshore bond issuance from the perspective of lawyers. At the same time, he made an in-depth analysis of regulatory and approval issues in China, such as the capital flows, domestic taxation, and domestic regulations established for offshore SPV issuers.

 

On behalf of the issuers, Wu Liguo, Deputy Minister of Finance Department, Nanjing Yangzi State-owned Group, delivered a speech titled “Expansion of Chinese Dollar Bonds Financing to Assist the Development of Jiangbei New Area”. He introduced the details of Chinese dollar bond financing and shared the experience, including the selection of cooperative institutions, the terms of bond prospectus, and the path of capital flows.

 

On behalf of the issuers, Xu Rongwei, Deputy General Manager of Yancheng Orienta Group, delivered a speech titled “Offshore Bonds Issuance and Transformation Development of Yancheng Orienta Group”. He shared the three development stages of the company since its establishment, while mentioned the key aspects of offshore bonds issuance, the use of offshore bonds, and the maintenance after issuance.