2018 Yunnan Municipal and the First Special Bonds

2018 Yunnan Municipal and the First Special Bonds

2018 Yunnan Municipal and the First Special Bonds

The FINANCIAL -- On August 10, Yunnan Provincial Government made a successful issue by tender of 14.5-billion-yuan municipal bonds through the SZSE Municipal Bond Issue System, Ministry of Finance.

This is the first time for Yunnan Provincial Government to issue municipal bonds on SZSE. In particular, the provincial higher learning special bond is another innovative variety of special municipal bonds the Ministry of Finance designs to promote the gross balance between project income and financing. In addition, it is the first provincial public higher learning special bond nation-wide right after the special bonds of land reserves, governmental toll roads, shantytown reconstruction and rail traffic.

The issue by tender of Yunnan municipal bonds include the ninth and tenth-tranche of general bonds, the forth-tranche special bond, and the first-tranche provincial public higher learning special bond (i.e. the fifth-tranche special bond), totaling 14.5 billion yuan in scale. Among them, the general bonds account for 11.2 billion yuan, with two types of duration (5-year term and 7-year term) and the bid-winning interest rates of 3.41% and 3.83%. The fourth-tranche special bond accounts for 2.3 billion yuan, with the duration of 5 years and the bid-winning 3.72% interest. The first-tranche provincial public higher learning special bond (i.e. the fifth-tranche special bond) accounts for one billion yuan, with the duration of 5 years and the bid-winning 3.78% interest. The underwriting group for the Yunnan municipal bonds consists of 43 underwriters that include 23 securities companies. With regard to the subscription, the total bidding by all underwriters is 29.76 billion yuan, 205% of the issue volume. The full-house average subscription multiple is 3.87, indicating energized subscription by underwriters.

Based on the overall planning of the project construction, the standardization of debt budget management has been improved for the Special Bonds for Yunnan Provincial Public Higher Learning Institutions through the careful accounting and detailed arrangement of project investment and construction, expected income, cost and capital balance. The total amount of funds raised from the special bonds is 1 billion yuan, of which 840 million yuan is used for the construction of the subproject of the Anning Campus of Yunnan University of Finance and Economics (1st Phase), and 160 million yuan is used for the construction of the Yunnan College of Finance and Economics. At the same time, the special bonds has further enriched the variety of municipal bonds, and has been a great promotion in improving the municipal bond issuance mechanism, increasing the marketization of municipal bonds and attracting more social capital to invest in municipal bonds.

Since the issuance of the Notice of the Ministry of Finance on the Pilot Development of the Special Municipal Bonds with Balance between the Project Income and Raised Funds in June 2017, innovative special municipal bonds have been continuously introduced. The Notice has laid a solid foundation for accelerating the construction of the matched system for special bonds and project assets and income, and building the municipal project income bonds based on national conditions and the reality. SZSE will continue to follow the decisions and arrangements of the China Securities Regulatory Commission (CSRC), actively implement relevant requirements of the Ministry of Finance, adhere to the promotion of supply-side structural reforms as the main line to perfect the financing mechanism for local governments, improve the management of special municipal bonds, and serve more local governments to innovate and try special bonds, so as to promote the continuous development and improvement of the municipal bond market.