Pan Gongsheng: Establishing a risk-sharing tool for technology innovation bonds to support private equity investment institutions in issuing long-term bonds for financing on the "Technology Innovation Board".

The Governor of the People's Bank of China, Pan Gongsheng, stated today at a press conference organized by the State Council Information Office that the People's Bank of China, together with the China Securities Regulatory Commission, the China Banking and Insurance Regulatory Commission, the Ministry of Science and Technology, and other departments, have actively prepared to launch a "technology board" in the bond market. This technology board aims to support financial institutions, tech companies, and equity investment institutions to issue technology innovation bonds. They are enhancing the system arrangements for issuing, trading, information disclosure, and credit rating of technology innovation bonds, as well as establishing a complete set of supporting rules adapted to the characteristics of technology innovation financing. The relevant policies and preparations are basically ready. Currently, the response from the market participants has been very positive, with various types of financial institutions, tech companies, and equity investment institutions actively communicating with the People's Bank of China and the China Securities Regulatory Commission, expressing their willingness to issue technology innovation bonds. Preliminary statistics show that nearly 100 market institutions plan to issue over 300 billion yuan in technology innovation bonds, and it is expected that more institutions will participate in the future. In order to support equity investment institutions in raising long-term debt financing on the "technology board," the People's Bank of China, together with the China Securities Regulatory Commission, will create a risk-sharing tool for technology innovation bonds based on the experience of setting up financing tools for private enterprise bonds in 2018. The People's Bank of China will provide low-cost refinancing funds to purchase technology innovation bonds. In collaboration with local governments, market-based credit enhancement institutions, and others, diverse credit enhancement measures will be taken to share the risks of bond investors' default losses, effectively reducing the financing costs of equity investment institutions and supporting the issuance of longer-term bonds, such as 8-year or 10-year bonds. In conclusion, the specific policy arrangements for the technology board in the bond market and the risk-sharing tools are conducive to further expanding the financing channels for tech companies and equity investment institutions, stimulating market vitality and confidence, attracting more social capital into the field of technology innovation, and promoting the mutual promotion and virtuous cycle between the private equity financing market and the stock exchange market.