(Yicai) July 3 -- Four companies, including Kelun Pharmaceutical and Jointown Pharmaceutical Group, have become the first to issue corporate debt through China’s covered bond program, a new way for private firms to secure financing.

Retailer Yuyuan Tourist Mart Group and Qitan Technology, a supplier of gene sequencing kits, were the other two firms to sell bonds through the program yesterday, the National Association of Financial Market Institutional Investors said.

The NAFMII, an interbank lending regulator, launched the new type of pooled debt instrument under the guidance of China’s central bank. It did not disclose how much the four companies raised.

These covered bonds should attract potential investors as it is possible to recover an investment from both the issuer and the collateral assets in the event of the issuer defaulting or going bust and they offer bankruptcy protection isolation vehicles such as trust plans, according to Wen Zexiong, a partner at Zhong Lin Law Firm.

Through the covered bond program, issuers can use movable and intangible assets with strong liquidity and well-established valuation systems as collateral, such as equity, accounts receivable, and intellectual property rights, creating a win-win situation for borrowers and investors, added Yu Ning, a lawyer at AllBright Law Offices in Shanghai.

The NAFMII has set up a system to help private companies apply, sending dedicated officials to give one-on-one assistance from the pre-application stage. Firms working in areas such as technological innovation, green and low-carbon development, rural revitalization, large-scale equipment upgrading, and consumer goods trade-in programs, will get priority access.

The Chinese government is serious about helping private businesses secure financing. As of June 30, the new debt instruments developed by the NAFMII have helped private firms to sell CNY5.02 trillion (USD690.2 billion) of bonds. In the first half of this year alone, issuance reached CNY228.8 billion (USD31.4 billion), up 16 percent from a year ago, according to the watchdog’s data.

Editors: Tang Shihua, Emmi Laine