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Blue Whale News October 10th News (Reporter Hu Jie) Today, the Ningbo Securities Regulatory Bureau issued an announcement warning the trustee of Zhejiang Xiangshan Economic Development Zone Chengnan Development Construction Co., Ltd. (referred to as "Xiangshan Economic Development Zone") and its bond project "21 Xiangjing 02", Shen Gang Securities.

According to the announcement, Xiangshan Economic Development Zone, as the issuer of "21 Xiangjing 02", did not use the bond funds raised according to the prospectus from October to December 2021, with an amount of 0.637 billion yuan. Tang Zhenhai, as the chairman and general manager of the company, bears direct responsibility for the above-mentioned violations.

The Ningbo Securities Regulatory Bureau pointed out that considering Xiangshan Economic Development Zone took the initiative to correct the issue and returned the above-mentioned funds to the raised funds account before April 2022 without causing significant adverse consequences, it decided to take administrative regulatory measures of issuing a warning letter to Xiangshan Economic Development Zone and include it in the integrity archive of the securities and futures market.

Image Source: Ningbo Securities Regulatory Bureau

Due to issues such as inadequate supervision of the use of funds raised by bond issuers, Shen Gang Securities also received a penalty.

During the on-site inspection, the Ningbo Securities Regulatory Bureau found that Shengang Securities, as the trustee of "21 Elephant 02," failed to effectively supervise the use of funds raised by the issuer, and failed to discover that some of the funds raised under "21 Elephant 02" were not used as agreed.

The above actions violated Article 6 of the "Administrative Measures for the Issuance and Trading of Corporate Bonds" (CSRC Order No. 180). The Ningbo Securities Regulatory Bureau decided to take administrative regulatory measures by issuing a warning letter and recording it in the integrity file of the securities and futures market.

Image Source: Ningbo Securities Regulatory Bureau

As the use of funds raised by the issuer is related to the safety of investors' funds, the trustee needs to disclose relevant information to the market truthfully, completely, and accurately.

According to the "Administrative Measures for the Issuance and Trading of Corporate Bonds," the trustee for publicly issued corporate bonds should fulfill the responsibility of "supervising the use of funds raised by the issuer during the bond's existence period," and the trustee for non-publicly issued corporate bonds should also fulfill their duties as stipulated in the trust management agreement. The "Corporate Bond Trustee Code of Conduct" (2023 Revision) points out that bond trustees should continuously supervise and periodically inspect whether the use of funds raised by the issuer is consistent with the relevant regulations and the corporate bond prospectus.

A brokerage investment banking professional pointed out to Lanjing News reporters that when fulfilling trustee responsibilities, brokerages need to continuously monitor the credit status of corporate bond credit enhancement institutions, the value and ownership of collateral, and supervise the receipt, storage, transfer, and payment of principal and interest of the funds raised. In actual practice, brokerages acting as trustees usually obtain relevant information on the use of raised funds through the issuer and banks, in this indirect way of information acquisition, brokerages are relatively passive in the supervision process, thus making it easier for shortcomings to occur in the supervision of fund utilization.

Wind data shows that the use of funds raised for the "21 Elephant 02" private placement bonds is to be used entirely to repay or redeem corporate bonds after deducting issuance costs. The bonds have an interest start date of October 18, 2021, a total issuance amount of 0.8 billion yuan, a maturity period of 3 years, and will mature for redemption on October 18 this year, with an interest rate of 4.54%. Currently, "21 Elephant 02" has a latest bond rating of AA+.

Tianyancha information shows that Xiangshan Jingkai was established in 2012, a member of Ningbo Xiangshan Marine Industry Investment Group, is an enterprise mainly engaged in the real estate industry, with the actual controller being Xiangshan County State-owned Assets Management Center.