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Debt financing instruments of non-financial enterprises issued directly for overseas investors for the first time under the Bond Connect program

On July 3, 2017, five debt financing instruments of non-financial enterprises were issued synchronously for domestic and overseas investors for the first time on a trial basis through the Bond Connect program. All these instruments had been issued with book building by noon of July 6.

On May 16, 2017, People’s Bank of China (PBoC) and Hong Kong Monetary Authority (HKMA) released a joint announcement on cooperation for mutual bond market access (Bond Connect) between Hong Kong and the mainland. After that, NAFMII, under PBoC's arrangements and deployments, facilitated its market members to recommend investors, adjust information disclosure system and formulate standard agreement, and conducted system commissioning and drills with infrastructures operation institutions. These efforts have laid a solid foundation for successful launch of the pilot program for issuance of debt financing instruments through Bond Connect.

On the first day of trial operation (July 3), five enterprises, Huaneng, Three Gorges, China Unicom, Chalco and State Power Investment Corporation (SPIC), issued bonds to domestic and overseas investors as "first-day pilot issuers". All bonds issued that day had completed book building by July 6, with a total sum of RMB7 billion. Overseas investors actively subscribed for the bonds with over 200% oversubscription rate throughout the market. More than ten overseas investors from Germany, South Korea, Hong Kong, Macau and other countries and regions, including Deutsche Bank, HSBC and Bank of East Asia, invested RMB1.27 billion in the bonds, accounting for 18.2% of the total. The types of overseas investors are diversified, covering central banks, commercial banks, securities companies, insurance companies, asset management institutions, and non-corporate products, fully demonstrating their strong interests in corporate credit bonds in China.

The formal operation of the Bond Connect program marked the beginning of a new stage in the opening up of China's bond market. In the past few years, NAFMII has gradually introduced overseas entities with good reputation from different regions and industries around the world, such as British Columbia of Canada, Poland, Germany's Daimler, France's Veolia and China Merchants Holdings (Hong Kong), to issue RMB bonds in the interbank market with a view to advance its internationalization. By the end of June 2017, altogether 26 overseas issuers had registered Panda Bonds with NAFMII worth RMB240.1 billion, and 35 bonds had been issued successfully, totaling RMB71.4 billion.