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The National First Sum of Directional Debt Financing Instrument (Project Proceeds) of Central Enterprise Having Been Issued in Dalian Free Trade Area

CCCG(Dalian) Real Estate Development Co., Ltd. in Dalian Free Trade Area hassuccessfully issued the first phase of 2021 non-public directional debtfinancing instrument (project proceeds) [hereinafter referred to as "PPN(project proceeds)"] in an issuing scale of RMB 540 million yuan. This sumof financing,as the first sum of central enterprise PPN (project proceeds), thefirst sum of PPN (project proceeds) issued by a project company of a centralenterprise acting as the main body in China and the first sum of commercialreal estate PPN (project proceeds) in Northeast China, effectively guaranteesthe smooth construction of the Northeast CCCG City Project.

TheNortheast CCCG Project, whichis located in Xiaoyaowan International BusinessDistrict, Dalian Free Trade Area, covers an area of 44,000 square meters withatotal investment about RMB 1.496 billion yuan and a fund gap over RMB 500million yuan. Due to the continuous tightening of such financing modes as bankloans, trust loan, etc., the project urgently needs to open upa new financingchannel.

Currently,themainstream mode of PPN (project proceeds) is taking the parent company as themain body for issuing bonds.However, this sum of financing takes the projectcompany as the main body for issuing bonds, the operating cash flow produced bythe project as the main source of debt repayment to set up no assets mortgageand pledge for an organic integration of innovative financial product and high-qualityassets, with the main underwriter issuing the PPN in the inter-bank bond marketas a whole. By adopting the mode of private placement, the interests are paidannually withthe principal to be repaid at maturity ona lump sum basis. With thebuyback term adopting the 3+2 mode,the income generated by project operation isused torepaythe principal and interests of the current PPN in priority.The bondrating is optimized underthe mode of difference makeup toenhancethe investors'confidence in holding bonds. As a result, the comprehensive project financingcost is controlled to be 4.0%-5.0% per annum.  

Thissum of financing breaks the traditional idea that project financing relies onbank loans to open up a new path of PPN financing for commercial real estateprojects with the central enterprise project company as the main body, andrealize a major breakthrough in direct financing forthe investment project ofa centralenterprise. It is an important achievement of Dalian Free Trade Areain deepeningthe integration of industry and finance.

        Firstly,improving the liquidity of enterprise funds

Incomparison with bank loans, the use ofproject proceeds notes is more flexible,and the raised funds can supplement the working capital to provide financialsupport for the development and operation of companies and investment in keyprojects, leading to a virtuous cycle of funds.

        Secondly,reducing the financing cost of enterprises

       Incomparison with bank loans, this sum of financing requires paymentof interestsona lump sum basis for the whole year, with the financing cost being lower thanquarterly interest payment for bank financing, thus effectively reducing thefinancing pressure of enterprises and ensuring the safety of capital chain.

Thirdly,ensuring the smooth construction of projects

Themain structure of the "Twin Towers" of the Northeast CCCG City willbe capped to become a new economic landmark of the headquarters of Dalian FreeTrade Area. The northeastern regional headquarters of China Communications ConstructionCo., Ltd. and other enterprises will soon move in the Area to promote theagglomerated development of such industries as construction, finance, R&Dand innovation, e-commerce, etc.therein.

Next,Dalian Free Trade Area will give full play to its advantage in priority fortrial, take the construction of a special zone for industrial innovation as anopportunity, deepening the integration of industry and finance as the main lineand the needs of enterprises and project construction as the guide, persist in strivingfor financial innovation, and accelerate the construction ofDalian into a regionalfinancial center.