Ogier has acted as Cayman Islands counsel to China Shengmu Organic Milk Limited on its successful issuance of the first tranche of RMB100 million (US$ 14.77 million) of super short-term commercial paper.
The bonds are the first issuance of social responsibility bonds in China, according to the law firm. The proceeds of the bonds will be used to support the operation of farmers and agricultural cooperatives in remote areas of China to improve the earnings of low-income groups and advance rural revitalisation.
China Shengmu is the largest supplier of desert organic raw milk in China with a strong focus on sustainable development and improving the climate conditions in the desert areas of China while creating economic benefits, Ogier said.
The law firm said it was also the first private enterprise “panda bond” with credit risk mitigation warrant (CRMW) placement in China. CRMWs are tradable warrants that, similar to credit default swaps, protect buyers from the default risk of the underlying bond.
‘Panda bonds’ is the more common term for renminbi-denominated commercial paper issued by a non-Chinese issuer in China. New fund management rules for panda bonds came in effect this year to facilitate the financing of overseas institutions in China’s bond market.
They allow issuers, among other things, to conduct foreign exchange derivative transactions to manage foreign exchange risks with domestic financial institutions and to remit raised funds abroad.
Approximately 75.4 billion yuan (US$10.7 billion) of such bonds were issued in the first three quarters of 2022, up 8.7% from a year earlier.
China Shengmu was rated AA by China Chengxin International Credit Rating.
The bonds were approved by the National Association of Financial Market Institutional Investors and independently certified by China Chengxin Green Finance Technology (Beijing) Limited in respect of its social responsibility elements, Ogier said.
The Ogier team in Hong Kong was led by partner Cecilia Li.
She said, “This transaction is also reflective of the continuous growth of the panda bonds market.
“We are glad to play a role in this and share our commitment to ESG development in the region.”
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