【Cube Debt Market】Henan announces 169 projects approved for special bonds / Expansion of special product corporate bonds / Zhongzhou Water Services 500 million yuan corporate bond issuer selection of underwriters

Issue 288

2024-12-27

Focus

Shanghai, Shenzhen, and Beijing exchanges revise guidance for specialized company bond subtypes

On December 27, the Shanghai, Shenzhen, and Beijing exchanges respectively revised and issued business guidance for company bonds of specialized bond subtypes. It stated that efforts should be enhanced to provide precise support for technological innovation, and the scope of issuers applicable to technology-innovation bonds should be broadened to include science-and-technology innovation investment-type and science-and-technology incubation-type issuers. Strengthen financing support for key areas and high-quality enterprises; broaden the scope of eligible issuers for rural revitalization bonds and short-term corporate bonds; expand the ways in which proceeds from bonds supporting small and micro enterprises can be used. For green bonds and bonds supporting small and micro enterprises, adjust the maturity arrangements to be more flexible in matching the replacement of earlier expenditures of own funds prior to issuance.

Shanghai, Shenzhen, and Beijing exchanges revise guidance for specialized company bond subtypes

Shanghai Clearing House: Extends the full settlement service time for bonds on December 31

On December 27, Shanghai Clearing House issued a notice saying that, in accordance with the People’s Bank of China’s spirit on doing well with payment clearing work on the year-end final settlement date for 2024, the end time of bond full settlement and clearing services on December 31, 2024 was extended from 17:00 to 18:00.

“Self-review and self-issuance” for local special bond projects; bond issuance pace next year will accelerate

Recently, the General Office of the State Council published the “Opinions on Optimizing and Improving the Management Mechanism for Local Government Special Bonds.” One major highlight is the delegation of approval authority for special bond projects. Guangdong, Jiangsu, and other 11 provinces and cities serve as the first batch of pilot regions for “self-review and self-issuance” of special bond projects. Liu Yu, chief economist at West China Securities, analyzed that under the “self-review and self-issuance” model, special bond issuance no longer needs to be submitted to the NDRC and the Ministry of Finance for review. Delegating review authority benefits provinces in independently arranging the authority over special bond capital, improves issuance and utilization efficiency, and thus drives the overall bond issuance pace to accelerate.

Macro Updates

In the first 11 months, the country issued an additional RMB 8B of local government bonds

Data from the Ministry of Finance shows that in November 2024, the country issued an additional RMB 105.1 billion in new bonds, including RMB 19.5 billion in general bonds and RMB 85.6 billion in special bonds. The country issued RMB 1,209.0 billion in refinancing bonds, including RMB 63.9 billion in general bonds and RMB 1,145.1 billion in special bonds. In total, the country issued RMB 1,314.1 billion in local government bonds, including RMB 83.4 billion in general bonds and RMB 1,230.7 billion in special bonds.

From January to November, the country issued an additional RMB 4.38T in local government bonds, including RMB 8B in general bonds and RMB 4.67T in special bonds. The country issued RMB 4T in refinancing bonds, including RMB 4.03T in general bonds and RMB 271.94 billion in special bonds. The total local government bonds issued by the country amounted to RMB 870.23 billion, including RMB 8.7T in general bonds and RMB 671.71 billion in special bonds.

State-owned Assets Supervision and Administration Commission of the State Council: We are studying and formulating guidance for adjustments of the lowest-performing management personnel in SOEs and the exit of those unable to perform]

On December 27, Guo Ping, a member of the CPC committee and deputy director of the State-owned Assets Supervision and Administration Commission of the State Council, said at the fourth special advancement meeting in 2024 of the campaign to deepen and improve the reform of state-owned enterprises that by the end of 2025, SOEs will generally implement a system for the adjustment of management personnel at the lowest tiers and exit mechanisms for those not performing satisfactorily. This is a clear requirement of the campaign to deepen and improve the reform. The State-owned Assets Supervision and Administration Commission is studying and formulating relevant guidance to strengthen policy direction.

Regional Highlights

Zhao Qingye, Head of the Henan Provincial Department of Finance: drive down the number of financing platforms and debt scale year by year

On December 26, Zhao Qingye, Party Secretary and Head of the Henan Provincial Department of Finance, said in an interview with reporters that in 2025, the province’s fiscal system will fully implement a more proactive fiscal policy; continue to exert efforts and provide stronger support to promote the sustained rebound and improvement of the province’s economy. Seize opportunities presented by the central government’s policy on replacing existing concealed government debt, and promote the gradual de-risking and reduction of concealed debt, as well as year-by-year declines in the number of financing platforms and the scale of debt.

Zhao Qingye, Head of the Henan Provincial Department of Finance: drive down the number of financing platforms and debt scale year by year

RMB 6.72T! Henan announces 169 special bond projects that passed review

On December 27, the Henan Provincial Department of Finance announced the 2024 sixth batch of special bond projects that passed review (non-planned-for-issuance projects). This announcement concerns 169 projects that passed review, with a total declared amount for issuance of RMB 34.37 billion. The announcement period is from December 27, 2024 to December 31, 2024.

RMB 34.37 billion! Henan announces 169 special bond projects that passed review

Anyang City: In 2024, secured RMB 23.44B in additional special bonds

A reporter learned from the Anyang Municipal Bureau of Finance that since this year began, Anyang has actively sought additional local government bond funds. As of now, the city has secured RMB 8B in additional local government bonds for 2024, including RMB 5.408 billion for project construction, RMB 1.675 billion for replenishing government fund-raising capacity, and RMB 3.89 billion for resolving debt risk. This has supported the construction of 99 projects such as the Anyang high-speed rail transportation hub project and the Anyang Yinxu Ruins Museum construction project, and has also effectively promoted the resolution of concealed debt risks in Anyang.

Issuance Updates

Xuchang Investment Group completes issuance of a RMB 220 million mid-term note; coupon rate 2.85%

On December 27, Xuchang Investment Group Co., Ltd. disclosed that it completed the issuance of its 2024 second tranche of mid-term notes.

This bond’s abbreviated name is “24 Xuchang Investment MTN002,” with an issuance size of RMB 220 million and a coupon rate of 2.85%, and a tenor of 5 years. The lead underwriter is Bank of Communications; the joint lead underwriters are Postal Savings Bank of China and Guoxin Securities. The issuer’s main credit rating is AA+. The proceeds from this bond will be used to repay the issuer’s outstanding debt financing instruments.

Zhongyuan Aviation Leasing completes issuance of a RMB 300 million green corporate bond; coupon rate 3.15%

On December 27, Zhongyuan Aviation Financial Leasing Co., Ltd. completed the issuance of its 2024 privately placed green corporate bonds for professional investors (second tranche).

This bond is abbreviated as “G24 Sinach-Aviation 2,” with a size of RMB 300 million, coupon rate 3.15%, and tenor of 5 (3+2) years. The lead underwriters are Yangtze Securities, Western Securities, and Shenwan Hongyuan Securities. The issuer’s main credit rating is AA+. The proceeds of this bond will be used to repay bank loans used to fund green industrial projects.

Luoyang Urban & Rural Investment and Construction Group completes issuance of a RMB 120 million corporate bond; coupon rate 2.38%

On December 27, Luoyang Urban and Rural Construction Investment Group Co., Ltd. completed the issuance of its 2024 privately placed corporate bond for professional investors (first tranche) (tranche type 1).

This bond is abbreviated as “24 Luojian 01.” The issuance size is RMB 120 million, coupon rate 2.38%, and tenor of 3 years. The lead underwriters are Haitong Securities and GF Securities. CICC International has assigned the issuer a credit rating of AA+. The proceeds from this bond are planned to be used to repay the principal of corporate bonds due at maturity or called back.

Xuchang Assets plans to issue a RMB 1.0 billion corporate bond; accepted by the Shenzhen Stock Exchange

On December 27, Xuchang Assets Management Co., Ltd.’s project for 2024 privately issued corporate bonds for professional investors was accepted by the Shenzhen Stock Exchange. The proposed issuance amount is RMB 1.0 billion. The underwriter/manager is Citic Capital and Western Securities. Xuchang Assets Management Co., Ltd. has registered capital of RMB 2.0 billion and is a wholly-owned subsidiary of Xuchang State-owned Capital Operations Group.

Bond Market Players

Henan Gas Group obtains an AA+ issuer credit rating

On December 27, after strict assessment by domestic authoritative credit rating institutions, Henan Gas Group Co., Ltd. successfully obtained an “AA+” issuer credit rating, with a stable outlook. Henan Gas Group was established on October 26, 2023, with registered capital of RMB 10 billion, and Henan Investment Group holds 100%.

Zhongzhou Water plans to issue a RMB 500 million low-carbon transition-linked corporate bond; selects underwriters

On December 27, Zhongzhou Water Holdings Co., Ltd. released a bidding announcement to publicly select underwriters for the project to privately issue low-carbon transition-linked corporate bonds. The bid submission deadline is January 20, 2025 at 14:30, and this project accepts joint bids. The planned issuance size of this bond by Zhongzhou Water is no more than RMB 500 million, tenor no more than 5 years, and the annualized underwriting fee rate is no more than 2‰. The issuer’s main credit rating is AA+.

Mu Haitao appointed as General Manager of Zhoukou City Investment Group

On December 26, Zhoukou City Investment Group Co., Ltd. announced that, after study by the Party committee of the group and a resolution by the board of directors, Mu Haitao was appointed as the company’s General Manager. The resume shows that Mu Haitao previously worked in the General Office of the Zhoukou Municipal Government.

Bond Market Sentiment

Non-market-oriented bond issuance; Chongqing Qianjiang Urban Investment receives a warning letter

On December 27, due to conduct involving non-market-oriented issuance of corporate bonds, the Chongqing Securities Regulatory Bureau decided to take an administrative regulatory measure of issuing a warning letter to Chongqing Qianjiang District Urban Construction Investment (Group) Co., Ltd.

Market Viewpoints

Guojin Fixed Income: Next year, refinancing and maturity pressure on non-investment-grade credit bonds concentrates in March to April

The Guojin Fixed Income research team analyzed the maturity of credit bonds in 2025 as follows: The maturity pressure on non-investment-grade credit bonds in 2025 is mainly reflected in March to April. Since maturity and put-back (callable redemption by holders) are the more common repayment types for credit bonds, this article mainly uses the sum of the amount maturing and the amount entering the put-back period to represent maturity pressure. Based on the outstanding credit bonds as of December 23, 2024, the combined amount of credit bonds maturing and put-back in 2025 totals RMB 10.32 trillion, of which the maturing amount is RMB 7.83 trillion and the put-back amount is RMB 2.49 trillion. The main maturity pressure in 2025 is concentrated in March to April, with the combined amounts for maturing and put-back of RMB 1.37 trillion and RMB 1.24 trillion, respectively.

What is the maturity pressure for 2025 urban investment bonds?

In 2025, urban investment bonds with AA+ and AA issuer credit ratings face significant maturity pressure. For 2025, the amounts for maturing and put-back of urban investment bonds with AAA, AA+, AA, and AA- and below issuer ratings are RMB 1.76 trillion, RMB 2.41 trillion, RMB 1.32 trillion, and RMB 33.2 billion respectively. The proportion of the maturing and put-back amounts relative to outstanding bonds is 31%, 38%, 38%, and 32%, respectively.

What is the maturity pressure for 2025 industrial bonds?

In 2025, industrial bonds with medium-to-high issuer credit ratings face significant maturity pressure. For 2025, the amounts for maturing and put-back of industrial bonds with AAA, AA+, AA, and AA- and below issuer ratings are RMB 4.07 trillion, RMB 0.52 trillion, RMB 0.15 trillion, and RMB 49.3 billion respectively. The proportion of the maturing and put-back amounts relative to outstanding bonds is 37%, 41%, 38%, and 7%, respectively.

Maturity pressure for industrial bonds in 2025 is mainly concentrated in central SOEs and state-owned enterprises. For 2025, the amounts for maturing and put-back of industrial bonds by central SOEs, SOEs, private enterprises, and other categories are RMB 2.16 trillion, RMB 2.14 trillion, RMB 0.27 trillion, and RMB 0.22 trillion respectively. The proportion of the maturing and put-back amounts relative to outstanding bonds is 36%, 36%, 30%, and 41%, respectively; the maturity pressure is more concentrated on central SOE and SOE issuers.

Byline: Shi Jian | Review: Li Zhen | Super-review: Wan Junwei

(Editor-in-charge: Wang Zhiqiang HF013)

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