What Is Private Placement Debt?

Private placement bonds refer to a type of corporate bonds that are issued and transferred by small and medium-sized enterprises in China in a non-public manner, and are scheduled to repay principal and interest within a certain period of time. . Small and medium-sized enterprises that are not currently listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange, temporarily exclude real estate and financial companies.

Private placement

Private placement financing is not using public methods,

The financing services industry is a generally information-poor market, with customers and

Benefits of SME Private Equity

1. Private placement is a convenient and efficient way of financing.

2. Private placement of bonds is a filing system for review of issuance, and the approval cycle is faster.

3. The use of funds raised by private placement bonds is relatively flexible, and the term is longer than that of bank loans, usually two years.

4. The comprehensive financing cost of private placement bonds is lower than trust funds and private borrowings, and policy discounts can be obtained in some regions.

Conditions for SME private placement

1. SME private placement debt management enterprises should meet the relevant national policies for SMEs defined standards.

1. Private placement of securities (mastery): also known as internal or private issuance, is an issue method for a small number of specific investors. Private placements are usually targeted only at those who have a close relationship with the securities issuer.

2. Pros and cons of private placement

advantage

Advantages of private placement issuance 1. Low issue cost.

Advantages of private bond issuance 2. The qualification standards for bond issuers are low.

Advantages of private debt issuance 3. No need to provide guarantee and credit rating.

Advantages of private placement bond issuance 4. Low requirements for information disclosure.

Advantages of private debt issuance 5. Conducive to establishing strategic cooperation with institutions in the industry.

Disadvantage

1. Directly issued bonds have low liquidity and can only be circulated by agreement transfer, and can only be conducted between qualified investors. ^[2]

The CSRC approved the Shanghai Stock Exchange and the Shenzhen Stock Exchange respectively to implement the Shanghai Stock Exchange

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.

At present, the China Association of Small and Medium Enterprises has sponsored the experts from the National Development and Reform Commission and the China Securities Regulatory Commission to conduct private debt training. Promote the issuance and popularization of private placement bonds.