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China joint infrastructure projects get nod to issue securities: regulator
March 10, 2017 / 11:08 AM / 6 months ago

China joint infrastructure projects get nod to issue securities: regulator

A construction site, should be the tallest building in Tianjin, is seen near Tianjin Port, in northern China February 23, 2017. REUTERS/Jason Lee

SHANGHAI (Reuters) - China’s stock market regulator said on Friday that several infrastructure projects which use a public-private partnership (PPP) model have been approved to issue securities, letting them tap a new source of funding.

Beijing has promoted the PPP model, which channels private money into public infrastructure projects, as local governments reel under heavy debt. But private investors have shown only lukewarm interest in such projects, which typically lock up capital for lengthy periods.

The China Securities and Regulatory Commission (CSRC) said on its official microblog that the Shanghai and Shenzhen stock exchanges have approved the securitization schemes for multiple PPP infrastructure projects.

“Asset securitization can make existing PPP assets more liquid, expand the funding channel for infrastructure projects, lower financing costs, and better attract private capital participation,” CSRC said.

Through securitization, infrastructure assets are turned into publicly-traded securities, freeing up capital while also meeting the demands of longer-term investors such as mutual funds and pension funds.

The Shanghai Stock Exchange (SSE) said on Friday that it has approved securitization plans for three PPP projects, including a water treatment project that will raise 530 million yuan ($76.7 million), and one for a tunnel, which intends to raise 1.16 billion yuan.

CSRC said the stock exchanges are reviewing applications from the first batch of nine PPP projects that want to issue securities.

Reporting by Samuel Shen and John Ruwitch; Editing by Richard Borsuk

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