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Debt financing instrument issuance consultation business

Introduction

1. Debt financing instruments refer to the securities that are issued by non-financial enterprises with legal personality (hereinafter referred to as Enterprises) in the inter-bank bond market and for which the principal and interest are paid within a certain period as agreed upon, mainly including short-term financing bonds, medium-term notes, directional notes, and ultra short-term financing bonds.

2. Short-term financing bonds: referring to the debt financing instruments that are issued and transacted by non-financial enterprises with legal personality in the inter-bank bond market and for which the principal and interest are paid within one year in accordance with the agreement, a direct financing method of raising short-term (less than 1 year) funds by enterprises. The issuing scale of short-term financing bonds does not exceed 40% of the corporate net assets.

3. Medium-term notes: medium-term notes are the debt financing instruments that are issued in installments in accordance with the plan by non-financial enterprises with legal personality in the inter-bank bond market and for which the principal and interest are paid within a certain period as agreed upon, a direct financing method of raising medium-and short-term funds by enterprises. Medium-term notes normally remain valid for 3-10 years, and the issuing scale does not exceed 40% of the corporate net assets.

4. Directional notes: directional notes are the debt financing instruments that are issued by a specific number of institutional investors in the inter-bank market, characterized by (i) having no restriction of 40% of net assets, (ii) slightly reduced requirements for information disclosure, and (iii) higher financing costs than those of short-term financing bonds and medium-term notes due to the effect of liquidity constraints, but still below the lending benchmark rate.

5. Ultra short-term financing bonds: Short-term financing bonds refer to the bonds with the term not exceeding 270 days, characterized by (i) having no restriction of 40% of net assets, (ii) the lowest issuing interest rate among all the bonds, and (iii) being able to achieve rolling issue. This product is applicable to high-end customers with the external rating of AAA.


Features

1. Low corporate financing costs. The issuing composite interest rate is approximately less than those on loans in the same period in accordance with different credit ratings; debt financing instruments can be issued at a fixed or floating rate, and future financing costs are locked at one time, thus hedging interest rate increasing or reducing risk more desirably.

2. Enriching financing channels of enterprises. The policy gives more support for direct financing, and debt financing instruments become a new financing channel for high-quality enterprises.

3. Enhancing the corporate image. At present, those conducting debt financing in the inter-bank market are high-quality enterprises. Debt financing can enhance the corporate image and increase corporate influence in the capital market.


Scope of application

Non-financial business possessing the status of a legal person in accordance with Debt Financing Tool Management Method for Non-Financial Business in Inter-Bank Bond Market issued by the People's Bank of China.


(Note: For details, please call 961 111 or come to nearby GRCB outlet.)

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