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Underwriting of Short-Term Financing Bonds for Securities Companies

I. Description
Short-term financing bonds of securities companies (“Short-term Financing Bonds”) mean the financial bonds issued by securities companies in the interbank bond market for the purpose of short-term financing, the principal of and interest on which should be repaid within an agreed period of time.
It is a type of financial bonds, and the maturities and types of bond issues can be flexibly designed based on the financing needs of issuers.

II. Target Customers
The product is applicable to securities companies in need of short-term financing and incorporated in the territory of the PRC (excluding Hong Kong, Macau and Taiwan), provided that they shall meet the following access conditions:
1. Have obtained the membership of the national interbank lending market for more than one year;
2. Have disclosed detailed financial information according to the uniform requirements for up to one year in the national interbank lending market, and had no record of irregularities in information disclosure in the last year;
3. Depositing and custody of their customers’ transaction settlement funds meet the requirements of the CSRC, and they have not misappropriated such funds in the last year;
4. Have a sound internal control system; their custody business and proprietary business are strictly separated for management; they have put in place a middle office to monitor the front and back offices and control operational risks; no major irregularities in violation of laws or regulations have been found in the last two years;
5. They adopt the market capitalization method to appraise the value of assets and liabilities, and can use reasonable methods to assess stock-related risks; and
6. Other conditions prescribed by the PBOC and the CSRC.

III. Function
The product is mainly intended to replenish the short-term funding of securities companies.

IV. Features and Advantages
1. Strong underwriting strength: ICBC is one of the Grade-A underwriters for T-bonds issued by the Ministry of Finance, tier-1 trader in open market operations of the PBOC; was the first domestic commercial bank that obtained the qualification for underwriting corporate debt financing instruments; and has been rated as outstanding underwriter and outstanding trader for many times by the Ministry of Finance and the PBOC.
2. Abundant experience in underwriting: ICBC has a professional underwriting service team with abundant experience in bond underwriting, and has established a sound and effective internal operating mechanism in terms of customer service, credit risk review & assessment, and underwriting trade execution.
3. Good communication and cooperation relations: ICBC has established and maintained good communication and coordination relations with regulatory authorities, and solid business cooperation relations with investors, and can hence effectively ensure the smooth issuance of products.

V. Price
The interest rate on the product varies with maturities, customer rating levels and market conditions. So the product is priced with reference to market prices and in compliance with the guiding opinions of regulatory authorities on issue prices.

VI. Service Channels and Hours
Securities company customers may contact ICBC directly during business hours to apply for the product, based on their financing needs.

VII. Application Procedures
1. Project review: Customers shall first submit an application to ICBC according to the requirements of regulatory authorities. Then ICBC will conduct due diligence and credit risk reviews, and sign relevant agreements with the applicants.
2. Registration application: ICBC submits project registration application materials to the CBRC and PBOC for review and approval.
3. Product issuance: Upon approval of a project by regulatory authorities, ICBC will promptly arrange for bond issuance.

VIII. Typical Cases
Since 2006, ICBC, as lead underwriter, has completed the issuance of short-term financing bonds for a number of securities companies, including Guotai Junan Securities, China Securities and Southwest Securities.

Note: The contents on this page are for reference only. The ultimate power of interpretation is under the Industrial and Commercial Bank of China Limited. For part of the contents, notice and specific regulations of local branches shall prevail.

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