This book provides updated, full-picture analysis of the laws and practices of cross-border debt finance in the PRC. It is featured by the first-handed experiences of the author’s academic research and legal practice in this field over two decades.
The author discusses legal and regulatory issues, transaction structures and documentation in relation to two debt finance products: loan and bond, covering the inbound structure (Chinese debtors’ raising funds from the international market) and the outbound structure (Chinese creditors’ supplying funds to the international market). For cross-border loans, this book thoroughly illustrates the foreign debt regulatory regime in the PRC and approaches the lending by Chinese banks to support exports and overseas investments under the “Belt and Road Initiative” (BRI). For cross-border bonds, it discusses how Chinese issuers, by designing various transaction structures, enter into the international bond market, and then researches the “opening-up” of Chinese bond market to both international issuers (for issuing “Panda Bonds”) and investors (for purchasing Chinese bonds).
This book is used as an authoritative source for not only students and researchers, but also bankers and legal practitioners, who are interested in the Chinese debt finance market.
Author(s): Xin Zhang
Series: Modern China and International Economic Law
Publisher: Springer
Year: 2021
Language: English
Pages: 341
City: Singapore
Series Editor’s Preface: A Wisdom Was Passed, While His Academic Big Fruits Are Still Alive
Preface
Contents
About the Author
Abbreviations
List of Diagrams
List of Tables
1 Introduction
1.1 Purposes of This Book
1.2 Framework of the Cross-Border Debt Finance in China
1.3 Methodologies of This Book
1.4 Statements on Terminologies, Laws and Information
2 Borrowing Foreign Debts: Loans
2.1 What Are “Foreign Debts”?
2.1.1 Definition of Foreign Debts Under PRC Law
2.1.2 SAFE’s Data on Foreign Debts
2.2 Who Can Borrow “Foreign Debts”?
2.2.1 The State Council and the Ministries
2.2.2 Local Governments
2.2.3 Financial Institutions
2.2.4 Domestic Enterprises
2.2.5 Foreign-Invested Enterprises (“FIEs”)
2.3 Foreign Debt Quota and Foreign Debt Registration
2.3.1 Foreign Debt Quota
2.3.2 Foreign Debt Registration
2.4 Cross-Border Loan Documentation: Legal and Practical Issues
2.4.1 Governing Law
2.4.2 Term Sheet
2.4.3 Loan Agreement
2.4.4 PRC Legal Opinion
3 Borrowing Foreign Debts: Guarantee and Security Interests
3.1 Chinese Legal Framework for Guarantees and Security Interests
3.2 Guarantee
3.2.1 Creation of Guarantee
3.2.2 Guarantors
3.2.3 Types of Guarantees
3.2.4 Statutory Rights of Guarantor
3.2.5 Scope of Guaranteed Obligations
3.2.6 Invalidity Issues
3.2.7 Guarantee Period
3.2.8 Guarantee Liability and the Main Contract
3.2.9 Capacity Issues
3.3 Security Interests
3.3.1 Mortgage
3.3.2 Pledge
3.3.3 Lien
3.3.4 Priority of Security
3.3.5 Structural Subordination
3.4 Quasi-Security
3.4.1 Deposit
3.4.2 Title Retention
3.4.3 Financial Leasing
3.4.4 Factoring
3.4.5 Security Assignment
3.5 SAFE Outbound Guarantee and Security Interests
3.5.1 The Concept of Cross-Border Guarantee and Security Interests
3.5.2 Outbound Security
3.5.3 Inbound Security
4 Financing International Transactions by Chinese Banks
4.1 Cross-Border Financing by Chinese Banks
4.1.1 Categories of Cross-Border Financing
4.1.2 Chinese Banks for the Financial Support of the BRI
4.1.3 Development Financing Products Box
4.1.4 Data and Information on Chinese Banks’ Overseas Financial Assets
4.2 Export Credit Loans by Chinese Banks
4.2.1 Definition of Buyer’s Credit
4.2.2 Structures and Documentation in a Chinese Export Credit Transaction
4.3 Project Financing by Chinese Banks
4.3.1 Project Financing with a Chinese Feature?
4.3.2 Structure and Documentation in International Project Financing Funded by Chinese Banks
4.3.3 Case Studies
4.4 Sinosure and the ECA Cover
4.4.1 Background of Sinosure
4.4.2 Selected Sinosure Products
5 Issuing International Bonds
5.1 Chinese Issuers in the International Bond Market
5.1.1 Types of Chinese Issuers
5.1.2 Market Information and Data
5.2 Main Structures of Issuing International Bonds by Chinese Issuers
5.2.1 Direct Issuance Structure
5.2.2 Outbound Guarantee Structure
5.2.3 SBLC Structure
5.2.4 Keepwell Structure
5.3 Legal and Regulatory Matters for Issuing International Bonds by Chinese Issuers
5.3.1 NDRC
5.3.2 PBOC and SAFE
5.4 Legal Documentation and Parties
5.4.1 Parties
5.4.2 Legal Documentation
6 Accessing the Chinese Bond Market: Panda Bonds
6.1 Chinese Bond Market
6.2 Panda Bonds
6.2.1 History and Evolution
6.2.2 Main Rules for the Panda Bond Market
6.2.3 Market Information and Data
6.3 Legal and Regulatory Issues for the Panda Bonds in the CIBM
6.3.1 Issuers
6.3.2 Regulatory Authorities
6.3.3 Application Documents and Process
6.3.4 Information Disclosure
6.3.5 Accounting and Auditor
6.3.6 Credit Rating
6.3.7 Use of Proceeds
6.3.8 Governing Law and Choice of Jurisdiction
6.3.9 Tiered Management System for Corporate Issuers
6.3.10 Legal Documentation and Parties
6.3.11 SPV Issuer
7 Accessing the Chinese Bond Market: Bond Investment
7.1 Accessing the Chinese Bond Market: History and Evolution
7.1.1 Evolution of the Investment Mechanisms
7.1.2 Current Status
7.2 QFII/RQFII
7.2.1 Evolution of the QFII/RQFII Mechanism
7.2.2 Application and Operation of QFII/RQFII
7.2.3 Scope of Investments
7.3 CIBM
7.3.1 Evolution of the CIBM Mechanism
7.3.2 CIBM Direct
7.4 Bond Connect
7.4.1 Evolution of the Bond Connect Mechanism
7.4.2 Operation of the Bond Connect
7.5 Summary
8 The Future of Cross-Border Debt Finance in China: Conclusions
8.1 Increasing Liberalization and Simplification of Foreign Debt Regulation
8.2 Towards a Unified Foreign Debt Regulatory Regime
8.3 Attraction and Supply of Funds
Appendix A China’s Foreign Debts: Data and Information
The Structure and Growth of Long-Term and Short-Term Foreign Debts in China from 2010 to 2020 (Unit: US$1 Billion)
Appendix B Form of Enterprise Overseas Debt Issuance Filing and Registration Certificate
Appendix C The Flowchart for Applying for the NDRC Foreign Debt Quota
Appendix D Form of SAFE Foreign Debt Registration Status Form
Appendix E Form of NDRC Post-issuance Filing Form
Appendix F Sample Term Sheet of Cross-border Loan with One Chinese Borrower
Appendix G Structure and Framework of Cross-border Loan Agreement with a Chinese Borrower
Appendix H Form of SAFE Outbound Security Registration Form
Appendix I Skeleton of Offering Circular for One Chinese Issuer
Appendix J Skeleton of Subscription Agreement with One Chinese Issuer
Appendix K Skeleton of Trust Deed with One Chinese Issuer
Appendix L Sample PBOC Approval Letter for One Panda Bond Financial Institution Issuer
Appendix M Sample NAFMII Notice of Registration Acceptance for a Corporate Issuer of the Panda Bonds
Appendix N Skeleton of Prospectus for One Panda Bond Issuer Prospectus
Appendix O Skeleton of Underwriting Agreement for One Panda Bond Issuer
