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Underwriting of Financial Bond (Finance Company)

Financial bonds for finance companies are marketable securities issued by finance companies (established in China by law) in the national interbank bond market, where the principal and interest are repaid under given terms.

Financial bonds for finance companies are one kind of financial bonds. Offering period and type of bond can be flexibly designed according to the financing needs of issuers.

Target Clients
Finance companies established in China (excluding Hong Kong, Macau and Taiwan) with good performance, need to raise funds in the mid-to-long term. Customers must meet the following conditions:
1. Good corporate governance mechanism;
2. Capital adequacy ratio of at least 10%;
3. Risk Control Indicators comply with the regulatory rules;
4. No material default and violation in latest three years;
5. Guaranteed by its mother company or other member companies that can offer guarantee, unless expressly exempted by China Banking Regulatory Commission;
6. Over 1 year in business, good performance, profitability ratio at least on par with the average industry standard 1 year before application, stable profit in the foreseeable future. The bad asset rate is under the average industry standard and sufficient allowance for impairment losses on asset 1 year before the application. There are at least RMB 300 million of the registered capital and net asset at least on par with the average industry standard 1 year before the application.
7. No matured debt outstanding.

Functions and Features
Financial bonds for Finance companies allow Finance companies to: 1. raise stable funds over mid-to-long term; 2. improve core liability ratio, liquidity risk and interest rate risk; 3. reduce capital cost; and 4. enhance efficiency. Issuance of financial bonds for finance companies is a good solution on the mismatch of capital funds. Asset and liabilities can be better matched over mid-to-long term to improve financial strength.

ICBC Advantages
1. Strong underwriting: ICBC is a Class A bond underwriting member under the Ministry of Finance, Class I trader of People's Bank of China's open market, the earliest commercial bank in China to be qualified for the underwriting of non-financial corporate debt instruments. For years ICBC has been named excellent underwriter and excellent trader by the Ministry of Finance and People's Bank of China.
2. Rich experience: ICBC has a team of professional staff experienced in bond underwriting, and a comprehensive, effective internal mechanism in place for customer service, credit risk assessment and underwriting execution.
3. Good relationship: ICBC maintains good contact with regulatory authority and good relationship with the investors. ICBC is able to underwrite the financial bonds issued by commercial banks.

Product Price
Offering interest rates for the financial bonds issued by commercial banks depend on the term, credit rating of the customers and market conditions, referencing market price and opinions of regulatory authority.

Service Channel and Hours
Finance companies are welcomed to contact ICBC directly during office hours, based on own financial requirements.

1. Verify: Customers must supply application documentation to ICBC required by the regulatory authority. ICBC will proceed due diligence, assess credit risk and sign relevant agreements with customers.
2.  Approval: ICBC sends the application documentation to China Banking Regulatory Commission and People’s Bank of China for approval.
3. Issuance: Once approved by China Banking Regulatory Commission, ICBC will proceed to issue the bonds.

Successful Cases
Since the second half of 2007, ICBC was among the first batch to be the lead underwriter in the issuance of financial bonds for finance companies. ICBC has underwritten RMB 1 billion and RMB 1.3 billion of financial bonds for Shanghai Electric Group Finance Company and WISCO Finance Company respectively. ICBC also underwrote RMB 6 billion and RMB 3 billion of financial bonds for Sinopec Finance Co. Limited and China Power Finance Company (CPFC) respectively.

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