Fixed Income Products of SZSE Continue to Innovate to Help Accelerate the Development of Green Industries

Fixed Income Products of SZSE Continue to Innovate to Help Accelerate the Development of Green Industries

Fixed Income Products of SZSE Continue to Innovate to Help Accelerate the Development of Green Industries

The FINANCIAL -- Green economy is becoming a new engine and new fulcrum for China to adjust its industrial structure and incite economic growth. Green bonds have become an important financing instrument to support the rapid and sustainable development of green economy and an important factor in promoting the ecological civilization construction strategy and implementing the green development concept in China. For a long time, SZSE has actively implemented the requirements on national ecological civilization construction, adhered to the concept of green development, and vigorously promoted the pilot and innovation of green fixed income products.

On April 22, 2016, SZSE issued the Notice on Launching the Pilot of Green Corporate Bonds to open up a "green channel", make specialists in charge of green bond auditing, and encourage third-party institutions to conduct green certification of green bonds to ensure that the funds raised with the bonds are invested in the green industry. In this May, SZSE, in consideration of the pilot experience, issued the Questions and Answers on Green Corporate Bonds to further optimize the relevant institutional system. At present, SZSE has issued a total of 138 green fixed-income products, raising a total of 93.2 billion yuan, including 12 tagged green fixed-income products which raised 6.2 billion yuan. In addition, there are many innovative practices such as green asset-backed securities products and green concept PPP products, strongly supporting the development of many sub-sectors in the green industry.

Recently, the public issue of renewable green corporate bonds to qualified investors in 2018 by Beijing Enterprises Clean Energy Group Limited was pre-approved by the SZSE and approved by the CSRC. The bond becomes the first green renewable Panda bond approved in China. Beijing Enterprises Clean Energy Group Limited is an HKEX-listed company, whose main business is photovoltaic, wind power, clean heating and other related businesses. It is the first time for an overseas issuer to issue "green" and "renewable" innovative portfolio projects in the SZSE bond market. This meets the financing needs of green corporate and, at the same time, reduces the asset-liability ratio and supplements shareholders' rights, further expanding the financing channels of overseas issuers and enriching the means of financial innovation to serve the green new economic. The declared amount of funds raised in this bond is 2.8 billion yuan, of which 2.3 billion yuan is intended to repay the relevant debts of the company's green industry, and 500 million yuan is used to supplement the liquidity required for the daily operations of the company's photovoltaic power generation, wind power generation and related businesses, effectively supporting the construction of the company's clean energy power generation project.

In addition, "TF Securities - BYD New Energy Vehicle Leasing Green Asset Support Special Plan" and "TF Securities - BYD New Energy Vehicle Central Financial Subsidy Green Asset Support Special Plan" recently received a letter of no objection from SZSE, marking the construction of the SZSE green asset securitization market has taken another important step. The basic assets of the two projects are financial leasing creditor's rights and trust beneficiary rights respectively. The respective sources of cash flow are the income of new energy vehicle financial leasing and the central financial subsidy for new energy vehicles. The use of raised funds is in line with the requirements stated in the Green Bond Support Project Catalogue issued by Green Finance Committee of China Society for Finance and Banking. BYD uses its technological advantages to actively expand related businesses in the field of new energy products. Through the innovation in green asset securitization products, BYD withdraws leasing and subsidy income in advance and reduces the pressure on capital turnover, effectively revitalizing the stocks and expanding financing channels.

Next, SZSE will continue to strengthen the construction and development of the green fixed income product system, providing more convenient, faster and more diverse direct financing channels for companies in the fields of ecological protection and environmental management, sewage treatment, biomass power generation, and new energy. Moreover, SZSE will fully unleash the restraint mechanism of capital market, enhance the standard consciousness of issuers and cultivate green investment concept so as to guide social capital in vigorously supporting green economy and boost the accelerating development of green industries.