SZSE and SSE jointly held a meeting via video streaming to advance the offering of sci-tech innovation corporate bonds by central enterprises on 28 December 2022. Relevant officials in charge from the Department of Corporate Bond Supervision of CSRC, and the Bureau of Property Right Management and the Bureau of Scientific and Technological Innovation, both under the State-owned Assets Supervision and Administration Commission of the State Council (the “SASAC”), as well as representatives from central enterprises and securities companies attended the meeting.

The meeting listened to the reports about the advancement of the issuance of sci-tech innovation corporate bonds by central enterprises, major problems and suggestions, and discusses in-depth the key issues on optimization of the bond financing mechanism, facilitating the bond buy-back mechanism, reducing financing costs, improving the appraisal methods for sci-tech innovation by central enterprises, strengthening the financing management of sci-tech innovation bonds and supporting central enterprises in launching infrastructure REIT pilot projects. A consensus was reached on how to build a cross-departmental cooperation and consultation mechanism for the implementation of various measures specified in theNotice.

At the meeting, SZSE and SSE briefed the recent progress in the issuance of sci-tech innovation corporate bonds. Over the last few years, both stock exchanges have pushed for the building of a full-cycle bond financing support system for sci-tech innovation companies. In 2017, the innovation and venture corporate bonds were launched, enriching the financing channels for innovation and venture enterprises at the start-up or growth stage. In 2021, the pilot projects for sci-tech innovation corporate bonds were initiated, expanding the targets of support to cover mature enterprises in the process of transformation and upgrading. In 2022, efforts were made to fully implement the pilot projects of sci-tech innovation corporate bonds on a regular basis, while theNoticewas released in collaboration with the SASAC, in a bid to give full play to the leading and demonstration role of central enterprises in sci-tech innovation. Since 2021, over 70 enterprises issued sci-tech innovation bonds raising nearly CNY 120 billion in total, with the funds mainly going to new energies, integrated circuits, AI, high-end manufacturing and other frontier fields to accelerate the conversion of scientifical and technological achievements into real productivity. Bond issuers included private enterprises like TCL Technology and Xiaomi Communications, as well as state-owned enterprises such as SCGC, SDIC and Changhong. Among them, 12 central enterprises and their subsidiaries, including PowerChina, China Huaneng Group, Luoyang Ship Material Research Institute and China Resources Leasing, have issued sci-tech innovation bonds, raising about CNY 25 billion in total since the release of theNotice. Eleven central enterprises and their subsidiaries, including CNPC, China Huadian Corporation, China Southern Power Grid and CGN Wind Power, have been granted more than CNY 200 billion of shelf offering quota for sci-tech innovation bonds and other corporate bonds.

Representatives of ten central enterprises, including CNPC, China Huaneng Group, China Three Gorges Corporation, SDIC, China Chengtong Group, China National Nuclear Corporation, China Communications Construction, CICT, China Southern Power Grid and China Reform Holdings Corporation, and two securities companies, including Huatai United Securities and Guotai Junan Securities, respectively introduced the efforts made to support sci-tech innovation, and gave opinions and suggestions on the facilitation of financing through sci-tech innovation bonds and related regulation and assessment. Attendees said sci-tech innovation bonds have drawn great attention and active participation by countless institutional investors in the market, with the issue costs far lower than expected. They also confirmed that apart from helping issuers cut financing cost and enrich financing channels, sci-tech issuance of innovation bonds is also a practical measure of enterprises to carry out State strategy about sci-tech innovation and improve sci-tech innovation capacity.

The meeting noted that sci-tech innovation bonds help channel various financial resources into sci-tech innovation, better serve China’s innovation-driven development strategy, and thus find favor with central enterprises and enjoy a huge potential. Also, the meeting called for efforts to improve institutional supply in key fields of sci-tech innovation, and establish and perfect the sci-tech innovation bond market mechanism consistent with sci-tech innovation rules, so as to promote the positive cycling among technology, industry and finance, advance the building of a new system nationwide to achieve sci-tech innovation, and help central enterprises become pioneers and national team members as the sources of original technologies.

Next, under the coordinated guidance of relevant departments under CSRC and SASAC, SZSE and SSE  will deepen the reform and innovation of the bond market, push for improved functions of the bond market, and help increase the share of direct financing, with the aim to better support sci-tech innovation in central enterprises and reforms of state-owned enterprises.