National Development and Reform Commission: Enterprises use foreign debt to raise funds in strict accordance with the approved purposes

According to the website of the National Development and Reform Commission, in order to further improve the management of enterprises' foreign debt and promote the long-term, healthy and stable development of the overseas bond market of Chinese-funded enterprises, on October 26, the Department of Foreign Investment of the National Development and Reform Commission, together with the Capital Department of the State Administration of Foreign Exchange, held a symposium on the foreign debt of enterprises in some key industries to listen carefully to the operations, foreign debt repayment plans and opinions and suggestions of the participating enterprises.

The meeting pointed out that it will continue to meet the reasonable and compliant foreign debt replacement and repayment needs of enterprises in terms of foreign debt filing and registration, capital export, etc., and at the same time require enterprises to continuously optimize the structure of foreign debt, use foreign debt to raise funds in strict accordance with the approved purposes, consciously abide by financial discipline and market rules, actively take the initiative to prepare for the redemption of the principal and interest of overseas bonds, and jointly maintain the company's own reputation and the overall order of the market.

On July 19, at a regular press conference held by the National Development and Reform Commission, Yuan Da, director of the General Department and spokesman of the National Development and Reform Commission, introduced the issuance of green bonds and other related bonds by Chinese-funded enterprises overseas. Yuan Da pointed out that in recent years, more and more Chinese-funded enterprises have issued relevant bonds overseas, which mainly show three characteristics:

First, the circulation has increased significantly. In 2020, Chinese-funded enterprises issued a total of 19 green bonds overseas, with a total scale of about US$8.5 billion. In the first half of this year, Chinese-funded enterprises have issued 29 green bonds overseas, raising about US$10.2 billion. It can be seen that since the beginning of this year, the overseas green bond market has heated up rapidly, providing more high-quality financial support for the green transformation of China's economic and social development.

The second is the continuous innovation of varieties. In recent years, the varieties of bonds that support the development of green and low-carbon cycles in the world have become increasingly diversified, in addition to traditional green bonds, climate bonds, and sustainable development bonds, in recent years, innovative varieties such as carbon neutral bonds and sustainable development-linked bonds have been derived, and the use of bond funds raised is relatively flexible. At present, 2 Chinese-funded enterprises have issued 3 sustainable development-linked bonds overseas, raising about US$1.55 billion.

Third, the maturity of bonds has been extended. According to the statistics of market institutions, in the first half of this year, the issuance and proportion of Chinese-funded overseas green bonds with a maturity of more than 5 years have increased, and more than 30% of enterprises have issued maturities of more than 5 years, which will help enterprises further optimize their financial structure and provide stable medium- and long-term financial support for green, low-carbon and sustainable development.

In addition, Yuan Da said that in the next step, the National Development and Reform Commission will focus on achieving carbon peaking and carbon neutrality, support enterprises with strong comprehensive economic strength, high level of international operation and sound risk prevention and control mechanisms to issue relevant bonds abroad, and strive to guide foreign debt funds for green and low-carbon circular development, further play the supporting role of green finance, and promote the green and low-carbon transformation of economic and social development.

Ma Jianfeng, deputy director of the Green Finance Committee of the China Society of Finance and Finance, previously believed in an exclusive interview with the Financial Times reporter that under the "double carbon" goal, China's green finance development space has great potential and contains huge investment needs. Ma Jianfeng said that according to the calculations of mainstream institutions at home and abroad, the scale of investment in related industries supported by carbon peak alone can reach more than 100 trillion yuan, and if 10% of the financing needs are met by the issuance of bonds, the growth space of green bonds will reach 10 trillion yuan.

Since the beginning of this year, under the guidance of carbon peaking and carbon neutrality targets, relevant measures to support green development and green finance have accelerated the pace of landing. In February this year, the State Council issued the Guiding Opinions on Accelerating the Establishment and Improvement of a Green and Low-Carbon Circular Development Economic System, which clearly proposed to vigorously develop green finance, develop green credit and green direct financing, unify green bond standards, and establish green bond rating standards.

In April this year, the People's Bank of China, the National Development and Reform Commission and the China Securities Regulatory Commission jointly issued the Catalogue of Green Bond Supported Projects (2021 Edition), which for the first time unified the definition standards of green projects by relevant management departments of green bonds, effectively reducing the cost of green bond issuance, transaction and management, and improving the pricing efficiency of the green bond market. The industry believes that the release of this catalogue will make China's green bonds more focused on the green and low-carbon development strategy, better empower the development of China's green finance, and promote international cooperation in the field of green finance.

Yang Yewei, chief analyst of fixed income at Guosheng Securities, said that from the national strategic level, policy support has formed the basis for the rapid development of the green bond market. As an important starting point for realizing the investment and financing of green industries, green bonds play an important role in the green transformation of China's economy and are an inevitable choice for China to achieve high-quality development.