OREANDA-NEWS. April 11, 2012. In recent years, on top of providing basic financial services for "Sannong" (agriculture, rural areas and farmers), Agricultural Bank of China Limited (ABC) actively tapped into its advantage in underwriting with debt financing instruments and explored new mode of direct service with capital market instruments to enterprises related to "Sannong", effectively relieving the capital pressure of enterprises, reported the press-centre of ABC.

It's reported that while expanding financing channels for enterprises related to "Sannong", ABC also achieved sound growth in bond underwriting. In 2011, ABC underwrote a total of 15 debt financing instruments for these enterprises, accounting for 47% of the market, and issued a total volume of RMB6.7 billion, 30.4% of the total market. The business stabilized at the top among the peers.

With the credit squeeze tightened last year, enterprises related to "Sannong" were facing difficulties in financing. Against this backdrop, ABC actively explored using capital market instruments to directly serve these enterprises. Based on the characteristics of debt financing instrument products, ABC put focus on serving as a leading underwriter for leading enterprises in agriculture industrialization to issue debt financing instruments in the market amoung the banks to expand their financing channels. In recent years, ABC has served as a leading underwriter for several national leading agricultural enterprises, and their radiation effect has driven the development of adjacent farming households, upstream and downstream industrial sectors and regional rural economy.

ABC pays great attention to providing quality issuing service and keeping under the reasonable control in financing cost of "Sannong" enterprises. Since most of these enterprises were facing problems such as low credit rating, small scale of bond issuance, immature corporate governance and non-transparent financial information, during bond issuance, ABC actively explored investors that were able to participate in low-rating bond investment such as rural credit cooperatives, urban commercial banks and securities traders, strengthened road show promotion according to characteristics of these enterprises, deepened understanding of investors on the enterprises and improved market recognition, eventually realizing the successful issuance of "Sannong" enterprise bonds. In 2011, the weighted average interest rate of debt financing instruments underwritten by ABC for these enterprises was 5.78%, lower by 87bp than the contemporary one-year lending benchmark rate, saving considerable financial cost for these enterprises.

In response to the fact that these enterprises were restricted by region and business structure and lacked of experience in open market financing, ABC tapped into its professional advantage in bond market, and offered the enterprises targeted education and training in accordance with the requirement of open market financing on corporate governance, operation capability and information disclosure, laying the foundation for them to grow bigger and stronger by using capital market.

It's introduced that since 2005, ABC has achieved substantial development in debt financing instrument underwriting, covering all the product lines such as CP, SCP, MTN, collection notes and private placement bonds. In 2011, the underwriting volume reached RMB168.3 billion, making ABC a front-runner in the market.