Shanghai authorities have unveiled a draft regulation designed to standardize offshore bond issuance and investment within the Pudong New Area, reflecting a structured effort to align local financial practices with international norms. The draft, “Provisions on the Development of Offshore Bond Business in Shanghai Pudong New Area (Draft),” sets out clear rules for issuers, investors, and service providers, offering a more predictable environment for cross-border capital deployment.

The regulation defines offshore bonds as debt instruments issued by foreign entities via registered custody institutions tied to Free Trade Accounts (FTAs), primarily targeting foreign investors with features such as scheduled principal and interest repayments and transferability. Eligible issuers include foreign corporate entities, international organizations, overseas subsidiaries of Chinese companies, and foreign branches of domestic financial institutions. Investors cover a similarly broad spectrum, including foreign corporates, sovereign wealth funds, and overseas arms of Chinese firms.

Crucially for global participants, issuers and investors must meet established governance, financial, and regulatory standards, including anti-money laundering, anti-terror financing, and tax compliance obligations. This creates a transparent, legally compliant channel for offshore debt investment.

The draft codifies the roles of primary and secondary custody institutions, ensuring proper registration, record-keeping, and protection of investor rights. Underwriting eligibility is clarified, and funds raised are generally expected to be deployed offshore, with any domestic use subject to cross-border capital regulations. Risk management is emphasized across the bond lifecycle, including disclosure obligations, regulatory reporting, and cross-border cooperation with established financial centers such as Hong Kong, London, and Singapore.

In her welcome address, Deputy Mayor of Shanghai, Jie Dong, reinforced Shanghai’s dedication to facilitating trade and investment. Highlighting the city’s strategic role in aligning the financial and trade sectors, she noted that the forum strengthens ties between Shanghai and Asia’s financial hubs, enabling shared growth and mutual prosperity. As an international financial center, Shanghai aims to build on these connections to drive further cooperation across Asia.