On October 11, 2021, the People’s Government of Shenzhen Municipality successfully completed the issuance of RMB 5 billion offshore multi-tranche RMB bonds. It was settled on October 19, 2021 and listed on the Hong Kong Stock Exchange. The issuance comprises three tranches including RMB 1.1 billion 2-year generational bonds as well as RMB 1.5 bn 3-year bonds and RMB 2.4 bn 5-year special bonds. The three-year and five-year special bonds are green bonds and the net proceeds will be used to finance water treatment projects, sponge city related projects, and clean transportation projects in accordance with the Green Finance Framework of the Shenzhen Municipal Government.
This marks a milestone in China as it is the first time a local government in China has issued bonds overseas. It is an important step for Shenzhen to implement the national “carbon peaking and carbon neutrality” strategy, build a pilot zone of socialism with China characteristics and expand market-oriented green financing channels. It plays an exemplary role in local government innovation by leveraging mechanisms and exploring the issuance of offshore RMS local government bonds. The issuance also plays a leading role in further strengthening the cooperation between Shenzhen and Hong Kong, accelerating the integration process of Guangdong-Hong Kong-Macao Greater Bay Area, deepening the two-way opening of China's financial market, and promoting the interconnection of domestic and foreign markets. The issuance of Shenzhen's offshore local government bonds represents the first appearance of China's local government credit in the international capital market. It opens a new channel for local government financing in offshore debt and helps shape the development pattern of domestic and international “double-circulation”. The issuance also provides domestic and foreign investors with quality asset allocation targets when the “Southbound Link” is officially launched and helps stimulate liquidity in China's Hong Kong bond market.
JunHe was the domestic legal advisor to the People’s Government of Shenzhen Municipality in this project and assisted in internal and external regulatory communications, reviewing transaction documents, conducting PRC legal due diligence, and issuing PRC legal opinions.