Big state-owned lender Bank of Communications (BOCOM) has become the first Chinese bank to underwrite a new debt instrument designed to channel funds to the country’s rural development efforts.
BOCOM recently served as the exclusive underwriter for China’s first registered rural revitalisation targeted debt finance instrument (注册贴标乡村振兴定向债务融资工具) for Jiangsu Runcheng Asset Operations Group Co., Ltd. (江苏润城资产经营集团有限公司).
The instruments have a term of three years, and the issue raised a total of 460 million yuan (USD$71.58 million). Proceeds raised will be used for the issuer’s “modern agricultural demonstration zones and agricultural base projects.”
The new instruments were first unveiled this year by China’s National Association of Financial Market Institutional Investors (NAFMII), with the goal of “effectively integrating poverty alleviation efforts with rural village revitalisation.”
In order to ensure the success of the issue as well as reduce coupon rates and financing costs, the issue was also accompanied by the launch of 460 million yuan in credit risk mitigation warrants (CRMW).