Listing guidelines set for PPP programs

The Shanghai bourse has come out with guidelines for the listing of public-private partnerships in China, a move that will help those that are financing infrastructure projects.

Listing priority will be given to PPP projects that support the development of the Xiongan New Area, synergetic development of the Beijing-Tianjin-Hebei region, the Belt and Road Initiative, the Yangtze River Economic Belt development and those for rejuvenating old industrial bases, as well as other projects in alignment with national strategic development.

PPP projects with the participation of industry leaders, and those that are highly market-oriented, with stable public demand and predictable cash flow, will also be encouraged to list, according to a circular on the guidelines.

The circular specified that PPP projects that acquire fees when the projects are launched can explore securitization of future yields based on contract agreements and set reasonable securitization rates.

Project companies need to have the capability to operate constantly, with complete and healthy internal control systems, and have no record of false disclosure or defaults, or black marks in credit records.

"The guidance will help brokerages, subsidiaries of funds and the project company to operate securitization in a standard manner, and will help strengthen risk management and protect investors' legal rights," the circular said.

Analysts say that enabling securitization of PPP projects will encourage more investors to get involved in PPP projects, as the measure of long-term yields is clarified and institutions such as trusts are more willing to participate in such projects with stable and steady returns.

"Securitization of PPP projects will provide investors with more liquidity and more channels to exit from projects," said a research note from Zhongtai Securities.

According to BRI Data, a market research and information provider, PPP projects with combined value of 3.17 trillion yuan ($476 billion; 407 billion euros; ￡363 billion) were transacted between January and September this year. In September alone, projects worth 466 billion yuan were transacted.

"China's PPP market has been expanding fast and has great potential. With more incentives for investors in terms of more liquidity and long-term yields, PPPs will play a more significant role in financing China's economic development," says Deng Xiyin, an analyst with Chang'an Trust.

wuyiyao@chinadaily.com.cn

(China Daily European Weekly 10/27/2017 page25)