(Yicai Global) Dec. 16 -- China Construction Bank’s Shanghai branch recently registered the city’s first outbound guarantee business, or onshore guarantee for offshore loans, for Shanghai Lingang Economic Development Group.

The issuance, done with the support and guidance of the State Administration of Foreign Exchange’s Shanghai bureau, uses cross-border guarantee for the first time, Yicai Global learned.

State-owned Lingang Group provides the guarantee for the bond issuance and uses local and foreign currency funds in the Lingang New Area to quickly bring overseas funds into China and improve the efficiency of capital operation.

As the host bank for the centralized operation of local and foreign currency cross-border funds of Lingang Group, CCB’s branch in Lingang New Area completed the registration of the outbound guarantee business for a dual-currency overseas issuance of bonds worth CNY1 billion (USD143.4 million) and EUR50 million (USD53.1 million), respectively, within five working days after receiving all materials.

Outbound guarantee business means that a domestic enterprises provides guarantees for their overseas-registered subsidiaries or enterprises controlled or held by them, so that the overseas units can secure loans granted by overseas banks.

Lingang Group is based in the Lingang New Area, with industrial park development, corporate services, and industrial investment as its main business. This issuance is a successful practice of the group to participate in regional financial innovation and take advantage of Lingang New Area policies to promote the offshore yuan-denominated bond issuance market.

Early this year, the SAFE’s Shanghai bureau issued a series of pilot reform policies to further enhance the capability of foreign exchange management to serve the real economy and support the construction of Lingang New Area. One measure is that qualified enterprises in the area can pass through simplified processes by directly going to banks to register their foreign exchange businesses, such as issuing overseas loans, foreign debts and cross-border guarantees.

According to industry insiders, the core of the pilot policy is to give enterprises in Lingang greater convenience and more autonomy for banks. The pilot business is also an implementation of high-level opening up to further improve financial services.

Editor: Peter Thomas