How do PRC companies directly offer USD bonds in Hong Kong?

PRC companies issue US dollar-denominated bonds (USD bonds) in Hong Kong mostly through direct offering, which is defined as a process whereby a PRC company offers bonds in Hong Kong directly as an issuer. From review by the foreign debt authority of credit rating assignments to registration of foreign exchange funds, direct offering provides for the most streamlined process from a regulatory perspective. However, an issuer must meet the high standards to qualify for direct offering.

Key steps for PRC companies issuing USD bonds in Hong Kong:

(1) In order to issue bonds in the Hong Kong market, the prospective issuer is required to obtain an assigned credit rating by S&P, Moody’s or Fitch.

(2) The issuer prepares internal procedural documents, such as resolutions at shareholders’ meetings and board meetings.

(3) The issuer prepares for filing and registration with the National Development and Reform Commission (NDRC). A PRC company that issues bonds in a foreign market through direct or indirect offering, as defined in Circular No. 2044, must complete foreign debt filing and registration procedures with the NDRC prior to the offering, and it must submit information on the issuance to the NDRC within 10 working days of the closing of each issue. The author recommends that the filing procedures require submission to the provincial NDRC office first, which will then transfer the data to the NDRC without review. The review process will be carried out by the NDRC.

Wang Zhiyu is a partner at Boss & Young