in recent years, the general office of the communist party of china central committee, the state council and the national development and reform commission have issued a series of policy guidelines on adjusting the debt structure of state-owned enterprises and preventing debt risks. for example, in the guidance on strengthening the constraint on the asset-liability ratio of state-owned enterprises, it is clearly proposed to establish and improve the asset-liability constraint mechanism of state-owned enterprises, strengthen supervision and management, and promote the asset-liability ratio of highly indebted state-owned enterprises to return to a reasonable level as soon as possible. it can be seen that the high debt ratio of state-owned enterprises has become a major hidden trouble restricting their steady development. how to relieve the debt pressure and control the debt ratio within a reasonable range has become an important step for state-owned enterprises to take on the road of reform.
at the just-concluded 6th global institutional investors summit, the head of the national development and reform commission (ndrc) attended the event and made a speech, offering a prescription for the revival of state-owned enterprises. in the forum's keynote speech session, ndrc officials focused on how state-owned enterprises through effective ways to reduce debt financing in-depth analysis. he pointed out that the current domestic macroeconomic downturn, monetary policy tightening, monetary policy to the market capital transmission process due to hedge capital risk premium, the real economy financing cost reduction space is limited, the future financing cost of state-owned enterprises will be higher. moreover, the endogenous and structural problems of soes will also directly lead to the aggravation of their debt reduction pressure.
if state-owned enterprises want to get out of the development dilemma, they need to grasp two elements, namely debt reduction and financing. we will reduce the debt ratio of soes, improve their debt structure, and continue to increase their liquidity. at the same time, through the international financial market to raise medium - and long-term funds for the development of enterprises, to introduce low-cost sources of capital. debt reduction and financing must be coordinated to provide sustainable endogenous capital for the development of state-owned enterprises and listed companies.
debt reduction financing drf asset management plan is based on the reform of state-owned enterprises this strong demand. in view of the operation of state-owned enterprises and listed companies, formulate a series of financing schemes with debt reduction effect suitable for the long-term business development of enterprises. through the international financial market to raise medium and long-term funds needed for the development of enterprises, help state-owned enterprises and listed companies to enter the international market with more favorable capital costs, expand the channels for enterprises to obtain low-cost funds, and finally achieve the effect of debt reduction.
specific to the implementation level, the head of the national development and reform commission elaborated on five solutions mainly covered by drf asset management, namely: cross-border commercial factoring, cross-border financial leasing, capital and equity increase, debt-for-equity swap, and spv project financing. enterprises can choose one or more schemes to participate according to their own operating conditions and financing needs.
cross-border commercial factoring refers to conducting cross-border commercial factoring directly to the financing parent company or transferring the receivables of the financing parent company to the hong kong subsidiary so as to carry out cross-border commercial factoring to the subsidiary established in hong kong. enterprises can also choose cross-border financial leasing to directly carry out cross-border financial leasing business with the financing parent company or the subsidiary set up in hong kong by the financing parent company. in addition, enterprises can raise funds by increasing capital and expanding shares. the parent company will set up a subsidiary in hong kong, and the fund company will increase capital to the hong kong subsidiary and promise to buy back the subsidiary at maturity. for enterprises with debt-for-equity swap needs, the financing parent company can transfer the debt to the subsidiary established in hong kong, and the fund company can acquire the underlying debt and conduct debt-for-equity swap operations on the hong kong subsidiary. in the implementation of the spv project financing scheme, the financing parent company sets up a subsidiary in hong kong and takes the project as the financing carrier. the fund company and the hong kong subsidiary set up a special purpose company (spv) in hong kong, and the spv is invested in the entity project.
because of its superiority, drf will play an important role in the reform of restructuring, stabilizing and increasing efficiency and lowering debt ratio of state-owned enterprises. under the influence of the trend of capital globalization, more high-quality overseas capital will also help state-owned enterprises get out of the difficulty of high debt, fully leverage assets, improve energy efficiency, and fundamentally promote state-owned enterprises to enter a new track of high-quality development through drf.