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Underwriting of Financial Bond (Finance Company)

I. Introduction
Financial bonds of finance companies are marketable securities issued by finance companies (lawfully established in People's Republic of China) in the national interbank bond market, where the principal and interest are repaid under given terms.

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

II. Target Clients
Finance companies established in People's Republic of China (excluding Hong Kong, Macau and Taiwan) with good performance and direct financing requirement. To apply, they must meet the following:
1. Good corporate governance mechanism;
2. Capital adequacy ratio not less than 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 ratio is below the average industry standard with sufficient provision for impairment losses on asset 1 year before the application. At least RMB 300 million of registered capital with net asset not below the average industry standard 1 year before the application.
7. No matured debt outstanding.

III. Functions and Features
Issuance of financial bonds helps finance companies raise mid-to-long term capital, increase core liability ratio, reduce liquidity risk, interest rate risk and capital cost, and improve efficiency. It 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.

IV. Advantages
1. Strong underwriting ability: 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 awarded 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’s good contact with regulatory authority and good  relationship with investors ensure successful SCP underwrite. 

V. Price
The interest rate is determined by the offering period, issuer's credit rating and market conditions. Market rate and comments from regulatory authority are used as reference.

VI. Service Channel and Hours
Customers may contact ICBC directly during business hours based on financial requirements.

VII. Steps
1. Verify: Customers must submit application documentation to ICBC required by the regulatory authority. ICBC will proceed due diligence, assess credit risk, and sign agreement with customers.
2. Approval: ICBC sends the application documentation to CBRC and PBOC for approval. 
3. Issuance: ICBC starts the offering once approved by regulatory authority.

VIII. Cases
In recent years, ICBC has underwritten financial bonds worth RMB 1 billion, RMB 1.3 billion, RMB 6 billion and RMB 3 billion for Shanghai Electric Group Finance Company, WISCO Finance Company, Sinopec Finance Co., Limited and China Power Finance Company (CPFC) respectively.

Note: Information herein is for reference only. Refer to the announcements and regulations of local branches for further details. Industrial and Commercial Bank of China Limited reserves the final right of interpretation.

Institutional Banking