- ZhengTong’s bond offering marks the
first time the Bank of China has given a standby letter of
credit (SBLC) to a private sector issuer;
- The SBLC allowed ZhengTong to use Bank of
China’s A1 rating, reducing funding costs.
However it priced at a 4.5% coupon, which was significantly
higher than SOE offerings backed by SBLCs;
- The Bank of China is to-date the only bank to
provide SBLCs. But more Chinese banks are expected to begin
providing such credit enhancements to bond
China ZhengTong Auto last month became the first
Chinese private sector issuer to offer a bond backed by a
standby letter of credit (SBLC). The deal is expected to open
the market for private sector ChinaCos looking to the
international bond markets.