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ICBC to Sell the First Local Government Bonds over the Counter

Industrial and Commercial Bank of China (ICBC) is about to sell the first-batch of local government bonds over the counter. According to the centralized deployment of the Ministry of Finance, from March 25 to April 3, 2019, Department (Bureau) of Finance of Ningbo, Zhejiang, Sichuan, Shaanxi, Shandong and Beijing will be the first to issue local government bonds in the over-the-counter (OTC) market as pilot players. Issuance of OTC local government bonds will help meet the investment and trading demand of customers with low risk appetite and enrich investment choices for customers. Meanwhile, it can help expand issuance, investment and trading channels of local government bonds and make an important approach for financially serving the real economy, preventing financial risks and deepening the financial reform.

According to an official with ICBC, ICBC actively practices the development philosophy of inclusive finance, pays great attention to the launch of local government bonds in the OTC market and goes all out to guarantee the issuance through product R&D, system renovation and business training. Customers can subscribe the bonds via ICBC outlets and e-banking channel. During the issuance, 24-hour non-stop selling at workdays will be available through e-banking channel.

It’s learnt that OTC local government bonds are based on public credit and therefore enjoy the advantages of high safety, sound liquidity, low threshold for investment and trading and exemption from income tax and value-added tax for interest income. This better meets the investment and trading demand of institutional and individual customers with low risk appetite. Besides, the funds raised will be used for developing local economy so that investors can support local economic and social development by investing in the bonds. Take Ningbo municipal government bonds, the first to disclose issuance information this time, for example. An amount of RMB300 million of the bonds will be sold to individuals and small and medium investors via counter of commercial banks, and the funds raised will be entirely used in local quality utility projects in Ningbo and the required minimum investment is only RMB100.

As China’s largest bond business bank, ICBC has been enjoying rich experience and a leading market position in selling OTC bonds. In 2002, ICBC launched the OTC bond business as one of the first-batch pilot banks. In 2014, it took the lead to exclusively issue the first China Development Bank bond and Export-Import Bank of China bond. In 2015, it realized 24-hour continuous trading of OTC bonds as the first in the banking industry. Meanwhile, ICBC is the largest bond market maker in the interbank bond market and possesses outstanding quotation ability and broad service channels, able to offer competitive quotations to customers. In the future, ICBC will continue to follow the regulatory requirements and enrich OTC bond businesses, striving to enable the public to share the development achievements of Chinese bond market.