What Are Private Placement Bonds?

Private placement bonds are classified into public placement bonds and private placement bonds according to the way they are issued. Private placement bonds are bonds raised to a small number of investors with a specific relationship with the issuer, and their issuance and transfer have certain limitations. The procedures for issuing private placement bonds are simple and generally cannot be traded on the securities market. The distinction between public and private equity bonds in the European market is not obvious, but in the US and Japanese bond markets, this distinction is very strict and very important.

Private placement bonds

Relative to private placement

advantage

1. Low distribution costs.

2. The qualification standards for bond issuers are low.

3. No guarantee is required.

4. Low requirements for information disclosure.

5. Conducive to establishing strategic cooperation with industry organizations.

Disadvantage

1. It can only be issued to qualified investors. The so-called qualified investors in China refer to

1. Public bonds Bonds that are publicly raised to an unspecified majority of investors are subject to legal procedures and can be transferred on the securities market.

2. Private placement bonds are bonds issued to specific investors. Their issuance and transfer have certain limitations. The procedures for issuing private placement bonds are simple and generally cannot be traded on the securities market.

As of October 2012, the 13 provinces, autonomous regions, and municipalities that have been approved for pilot SME private placement bonds are Beijing, Shanghai, Tianjin, Chongqing, Guangdong, Shandong, Jiangsu, Zhejiang, Hubei, Anhui, Inner Mongolia, Guizhou, and Fujian. The approval for the six eastern coastal economically developed provinces and cities to expand to the central and western regions shows a nationwide spread.