On March 10, China Huaneng Group (Huaneng) issued RMB4 billion of short-term commercial papers in DFI (unified registration of a variety of debt financing instruments) mode, with the maturity of 365 days and the coupon rate of 2.48%/ year. Agricultural Bank of China Limited (ABC) is the lead underwriter of this term of commercial papers.
DFI is the latest debt financing instrument launched by the National Association of Financial Market Institutional Investors (NAFMII) according to the classified management mechanism for debt financing instruments. Through DFI, the issuer can register multiple types of public offering bonds all together to facilitate direct financing and reduce financing costs of enterprises. In the DFI brewing stage, ABC introduced the service and its processes to some selected high-quality enterprises and helped them prepare the registration materials in advance. Huaneng is China's largest state-owned power enterprise with the installed capacity of 160 million kilowatts, ranking first in the world. As a capital intensive industry, the power industry has a large fund demand in the construction and operation stages and the need for both smooth financing channels and controlled financing costs. Being one of the largest market makers in the financial market, ABC is also a leader and practitioner of product innovation in the direct financing market. After the communication, ABC and Huaneng hit it off in DFI registration and started preparations promptly. On the day of DFI debut, Huaneng submitted the materials and eventually became one of seven enterprises which registered for DFI in the first batch.
After the registration, Huaneng immediately issued the first term of commercial papers according to funding demand. When the issue was finished on March 10, Huaneng became the first central enterprise to issue commercial papers in DFI mode. The coupon rate of 2.48%/ year marks a new low in the issue price of short-term commercial papers in the financial market in recent years. Thus, with its strong financial and underwriting capabilities, ABC helps Huaneng effectively reduce the financing costs, to achieve a win-win situation.