Yieh Phui (China) Technomaterial Co., Ltd. (“Yieh Phui (China)”), Yieh Phui Enterprise Co., Ltd.’s subsidiary in Mainland China, has recently obtained the registered approval from the National Association of Financial Market Institutional Investors to issue a maximum of RMB 600 million 1-year commercial paper (CP) in China’s interbank bond market for the next two years. This makes Yieh Phui Enterprise Co., Ltd. the first Taiwanese manufacturer to issue non-financial institution (FI) corporate debt financing instrument in Mainland China’s interbank bond market through its wholly-owned subsidiary onshore. BNP Paribas (China) Ltd will act as the sole financial adviser and CITIC Bank will be the sole underwriter.
According to Yongxian Chen, CFO of Yieh Phui Enterprise Co., Ltd., the issuer rating and bond rating of Yieh Phui (China) are both granted AA- by Shanghai Brilliance Credit Rating & Investors Services Co., Ltd., recognising the company’s financial and business performances. In particular, Yieh Phui (China) managed to achieve profits for six consecutive years, including record high profits in 2014, despite the challenging market environment in the past few years. Against the backdrop of the easing monetary policy in China and People’s Bank of China lowering interest rates and deposit ratio, Yieh Phui (China) will capitalise on the continued downward trend of the onshore financing interest cost to issue multiple tranche of CPs, so as to reduce the financing cost and diversify its financing channels.
CG Lai, Head of Global Markets, Greater China, BNP Paribas, said: “The transaction is a milestone for both Taiwanese corporates and China’s onshore bond market. It proves that the Chinese authorities are indeed committed to reform and are opening up the onshore interbank bond market to multinational enterprises as an additional financing platform for the enterprises to grow their business in China.”
Since the Renminbi reform on 11 August 2015, the offshore Renminbi debt markets have become quieter. On the other hand, many corporates begin to pay more attention to the onshore bond markets in China. By issuing non-FI corporate debt financing instruments in China amid the current low interest rate environment, corporates with subsidiaries in Mainland China not only can enjoy lower financing costs, but can also raise their visibility in the market.
According to China’s leading financial data provider, Wind Info, China is one of the world’s fastest growing bond markets. The issue size in China’s primary bond markets reached RMB 12 trillion in 2014, 33.7% up from 2013, in which corporate-related bonds accounted for RMB 5.5 trillion. So far in 2015, the total amount of bond issuance is already close to RMB 18 trillion, far exceeding the total amount in 2014, making China one of the most important bond markets in the world.