Qualifying cross-border financing deals with Chongqing hit $5.78b in August

Bond issuance by Chinese issuers in Singapore almost doubled in 2017 to reach $18b.

The Chongqing Connectivity Initiative (CCI) has paved way for 51 CCI qualifying cross-border financing deals worth $5.78b (US$4.2b) as of August, as Chinese firms continue to get a lift from raising capital in Singapore’s financial centre, Monetary Authority of Singapore (MAS) managing director Ravi Menon revealed.

In his keynote address at the Singapore-China (Chongqing) Financial Summit, Menon said that the scope of cross-border financial services has extended beyond Chongqing to other parts of Western China, adding that new channels for cross-border financing have opened up.

The official also mentioned relevant transactions, including Western China firm China Aoyuan Property Group which listed two bonds in the Singapore Exchange (SGX) that totalled $963.70m (US$700m on the Singapore Exchange (SGX). Meanwhile, China’s first cross-border real investment trust (REIT) containing outlet malls was also launched in SGX in 2018 which garnered $963.70m (US$322m) in initial public offering (IPO) listing.

“As the largest REIT market in Asia ex-Japan, Singapore can help connect Chinese assets with a diversified pool of investors, including high net worth individuals from ASEAN and global sovereign wealth funds,” Menon noted, saying that Singapore enabled Chinese companies to diversify their investor base through the Lion City’s $3.3t pool of assets under management.

Menon also said that Singapore can back the financing needs of Chinese companies expanding into Southeast Asia and beyond.

“Take for example, the New Hope Group, an agricultural and food processing company based in Western China,” he explained. “It has been raising funds in Singapore for its overseas expansion.”

He also cited firms such as Chongqing Western Modern Logistics Industry Zone Development Construction and Chongqing Grain Group which have issued close to $1b worth of bonds from Singapore. Menon revealed that bond issuance by Chinese issuers in Singapore almost doubled in 2017 to reach $18b, of which, more than 25% was issued by first-time Chinese issuers in Singapore.

“Singapore’ Asian Bond Grant Scheme will help such first-time issuers by offsetting a part of their typical issuance costs,” he explained, noting Chinese consumer electronics player Haier Group benefitted from said scheme when it issued a US$1b perpetual debt security in Singapore.