SZSE approved registration of privately-placed SME bonds on Thursday 7 June2012,, ushering in high-risk uncollateralized debt offerings from SME issuers. According to a SZSE representative, the exchange received issuance documents from 13 SMEs located in Beijing, Shenzhen,Zhejiang and Jiangsu. Eight securities firms, including Guosen Securities, BOC International (China) Limited, China Development Bank Securities, China Securities, Ping An Securities, Zheshang Securities, Guotai Junan Securities and Sealand Securities, served as underwriters. As of 7 June 2012, 9 registrations had been completed and 4 remained in progress.
The 9 registered issuers cover sectors of electronic information services, energy conservation services, high-end manufacturing, tourism and warehousing and logistics. They include small and micro-business with share equity less than CNY 20 million and medium-sized enterprises. The issuers employ 300 staff members on average. Among the 7 non-state-owned enterprises, 4 were certified as Hi Tech Enterprises at state or provincial levels. The proposed offering sizes range from CNY 20 million to CNY 250 million, with maturity varying between 1 and 3 years. Among them, 8 issuers adopted credit-enhancement measures and 6 provided credit ratings on proposed projects or issuers themselves with highest ratings at AA level. The issuers plan to set the interest rate for SME bonds within the range of 9.5% to 13.5%.
The first SME bonds will be traded on the SZSE Comprehensive Trading Platform for Negotiated Deals and with information disclosed through the SZSE Members’ Business Zone once they complete the issuance procedures and registration with China Securities Depository and Clearing Corporation. The SZSE representative emphasized that the privately placed SME bonds are high-risk fixed-income products with no requirements on issuers’ net-asset or profitability levels. In order to control risks, SZSE does not admit retail investors at early stages of the trial operation. Institutional investors, who subscribe to or trade SME bonds, shall possess reasonable capacities of risk identification and tolerance, familiarize themselves with associate risks, make independent judgments based on the bond issuers’ information disclosure and be self-responsible for risks.