The Railway Bond returns to Shenzhen Stock Exchange

The Shenzhen Stock Exchange (SZSE) has informed that the 9th tranche of China Railway Construction Bond (the Railway Bond) shall be listed and traded both in the interbank market and stock exchanges.

Successfully issued on June 6, the Railway Bond shall be listed in SZSE on June 11. The bond was offered with a 5-year term and a 20-year term. The 5-year term bond (abbreviation: Railway 1817; code: 111901) pays 4.46% interest and has a subscription ratio of 1.96, while the 20-year term bond (abbreviation: Railway 1818; code: 111902) pays 4.78% interest and has a subscription ratio of 2.56, each raising CNY 10 billion respectively. The return of the Railway Bond to SZSE is well received and highly recognized by the market.

The cross-market listing and trading of the Railway Bond has fully leveraged the convenient infrastructure of SZSE, and raised the willingness to participate of different investors such as insurance institutions, securities companies and fund companies. The interest rate of the Railway Bond is 5BPS lower than the evaluated rate of return on the day of the offering, effectively reducing the financing costs on the part of the issuer.

SZSE and China Securities Depository and Clearing have given full consideration to the opinions and suggestions of investors and underwriter when organizing relevant work to push through the return of the bond to SZSE. They made continuous efforts to optimize and determine the smooth operation between the registration and depository processes.

With close and effective cooperation between the “front office” and the backstage, registration and listing of all the Railway Bond deposited in SZSE was completed as scheduled. Thanks to SZSE’s one-stop registration and listing services, the Railway Bond shall be listed on SZSE within 3 days after the issuance through bidding, as effectively as the listing of T-bonds.

In recent years, SZSE has been actively introducing bonds with high credit rating such as local bonds and the China Development Bank Bond. The return of the government-backed Railway Bond to SZSE would facilitate the optimization of the product structure of SZSE bond market in the long run, diversify bonds with high credit rating, and expand the depth and breadth of the market. Besides, of the Railway Bond deposited in the SZSE bond market this time, there is a 20-year-term product whose investors are mainly comprised of insurance and asset management institutions.

The continued participation of the institutions shall help build an investor base that is sophisticated and stable. Next, SZSE shall, under the leadership of China Securities Regulatory Commission, actively implement new developing ideas, continuously push forward the supply of innovative products in the bond market, and improve the capacity of the bond market to serve the real economy.

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