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Bonds boost access to funding for enterprises

Source: chinadaily Time: 13 02,2023

Officials from Shanxi Securities Regulatory Bureau visit a local company to learn about its fundraising needs.Zhang Jufeng / For China Daily

Issuing bonds through the securities markets is now a major source for Shanxi's enterprises to access funding, according to the Shanxi Securities Regulatory Bureau.

The bureau's statistics show that by the end of 2022 Shanxi's companies raised 79.95 billion yuan ($11.78 billion) worth of funds from capital markets. Of the funds, those raised through the bond markets amounted to 67.34 billion yuan, increasing 25.3 billion yuan, or 60 percent, from the previous year.

According to Li Zehua, head of the bureau, bond markets are an important part of China's capital markets, with transacted varieties including corporate bonds, asset-backed securities and real estate investment trusts.

He said the State's securities supervision authorities and China's major securities markets launched supportive measures for the corporate bond registration system, which has led to remarkable ease of fundraising for business entities, especially those involved in the real economy sectors.

The bureau's data show that Shanxi's 28 companies issued 70 corporate bonds and asset-backed securities through the securities markets in 2022. The two varieties amounted to 65.18 billion yuan and 2.16 billion yuan respectively.

Li said most of the corporate bonds were issued by nonfinancial enterprises whose issuance amounts reached 61.56 billion yuan, accounting for 91 percent of the total amount. In addition, 47.27 billion yuan worth of corporate bonds, or 72.5 percent, were issued by manufacturing enterprises. "This indicates that a lion's share has gone to the real economy sectors," Li said.

The official added that bonds issuance has played a crucial role in supporting Shanxi's major development initiatives. For instance, Shanxi as a major coal producer plays an important role in ensuring the nation's energy security.

"Shanxi's major energy companies, including Shanxi Coking Coal Group and Jinneng Holding Electricity, raised funds totaling 30.94 billion yuan through issuing bonds last year," Li said. "This helped them improve their capacity for supplying energy to the rest of nation."

Taiyuan Longcheng Development Investment Group is the major infrastructure investor and developer for the Taiyuan-Xinzhou Integrated Economic Zone, a part of a recent provincial program to create a city cluster between Taiyuan and Xinzhou. It secured 5 billion yuan of funds through issuing bonds last year, according to Li.

He said the Shanxi Securities Regulatory Bureau will make further efforts to help local enterprises raise funds via the bond markets.

"We are helping enterprises access new bond-issuing channels like asset-backed securities and real estate investment trusts," Li said.

China's securities markets launched the real estate investment trusts, or REITs, in June 2021. REITs are one of the favored bond varieties among infrastructure developers.

"To help infrastructure developers access this new type of bond, Shanxi released 10 supportive measures for the development of REITs at the end of 2022," Li said. "We are now planning to establish a pool of REITs projects, helping companies explore this new channel of fundraising in the near future."

By Yuan Shenggao
Zhang Jufeng contributed to this story.