Silk Road Bond Bridging the Financing Needs of Belt and Road Countries
Author(s): Media OutReachHONG KONG, CHINA, September 9, 2016: Continuing the dynamic of the G20 Leadership Summit early this week, International Capital Market Association ("ICMA") and Dagong Global Credit Rating ("Dagong") co-organized...
cityairnews
Sep 8, 2016 12:30
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HONG KONG, CHINA, September 9, 2016: Continuing the dynamic of the G20 Leadership Summit early this week, International Capital Market Association ("ICMA") and Dagong Global Credit Rating ("Dagong") co-organized a groundbreaking Summit, "Belt and Road Summit -- Financing Through Silk Road Bond" ("the Summit"), in Hong Kong today. The Summit focused on Belt and Road economic growth, financing needs, and how to bridging the gap in the current system. It was agreed that the opportunities of the Belt and Road markets are immense and the ability for these countries involved, especially for those with less developed financial markets, to raise foreign funds to finance their infrastructure projects and domestic consumptions is vital to the success of the "Belt and Road" economy growth. Martin Scheck, Chief Executive of ICMA, said in his welcome remarks, that this Summit is the first step towards finding an internationally recognized means of funding for this important initiative which is trying "to bring prosperity to the many developing Asian countries along the route that lack the capacity to undertaking major infrastructure projects on their own, connecting them through a web of airport, deep water ports, fiber optic networks, highways railways, oil and gas pipelines." Guan Jianzhong, Chairman of Dagong, pointed out that "the Summit aims to discover a fundamental structure which can spur the economic growth of the Belt and Road countries."
"What we need today is to build a shared vision of growth and stability to avoid the next global collapse and ensure lasting conditions of prosperity" said Dominique de Villepin, the former Prime Minister of France. This was echoed by Mr. Guan. He further introduced the innovative concept "the Silk Road Bond ("SRB")" which in Mr. Guan's vision, should "create a new standardized asset class which has broad appeal to both issuers and investors in the international markets, and which can be scaled up to provide the volume of financing that can really make a difference."
The Summit also featured three high level panel discussions. The panels focused on the outlook for the Belt and Road countries' capital markets. The renowned panellists discussed the ability for the "Belt and Road" countries, especially for those countries with less developed financial market, to raise foreign funds to finance their infrastructure projects and domestic consumptions and how Hong Kong, with its well development capital market, could lead the development process to realize the vision. Antony Leung, former Financial Secretary of Hong Kong S.A.R., Group Chairman & Chief Executive Officer, of Nan Fung Group pointed out that "Hong Kong, with its established capital market, can be a catalyst to this very innovative Belt and Road initiative."
How Silk Road Bond will benefit the Belt and Road economies, and particulars of this innovative fund raising method were also covered by the panellists. General principles for issuance of SRB, risk allocation and investor appetite, education and support, as well as policy issues were touched upon. Amongst all these important topics, government support and policy development are identified to be most important features of SRB. Shaukat Aziz, former Prime Minister of Pakistan, pointed out "policy development of infrastructure financing by the governance of the Belt and Road countries is of optimal importance for economic growth of the Belt and Road markets."
Following the Summit, ICMA intends to work with key stakeholders including major Chinese and international banks, law firms, audit firm, and credit rating agencies, to assess the feasibility of developing Silk Road Bonds. The main areas of focus are expected to be:
Engagement with the stakeholders whose support is critical to the success of the initiative including, the Chinese authorities, authorities of other belt road countries, multilateral development banks and investors.
Agreement of a set of principles for the issuance of Silk Road Bonds.
Assessment of the risk appetite amongst investors for this asset class
Date:
Friday, September 9, 2016
