央行推动自贸离岸债发展，或部分缓解城投融资约束

Core Viewpoint - The People's Bank of China (PBOC) emphasizes the development of "free trade offshore bonds" as part of eight major financial opening measures announced by Governor Pan Gongsheng at the 2025 Lujiazui Forum, aiming to address debt rollover needs and support enterprises involved in the Belt and Road Initiative [2][3] Group 1: Development of Free Trade Offshore Bonds - "Free trade offshore bonds" are defined as bonds issued to domestic and foreign institutional investors with free trade accounts within the free trade zone, allowing issuers to be from domestic, free trade zone, or foreign entities, and can be denominated in both RMB and foreign currencies [3] - The issuance of these bonds, also known as "pearl bonds," began in 2016 with a successful issuance of 3 billion RMB in local government bonds, marking the inception of the bond market in the Shanghai Free Trade Zone [3] - The market for free trade offshore bonds saw a significant increase in issuance, surpassing 100 billion RMB for the first time in 2022, and by mid-2023, the issuance scale had already exceeded twice that of the entire previous year, with city investment companies accounting for 77% of the market [3][4] Group 2: Regulatory Environment and Market Concerns - Concerns about potential defaults have arisen due to the rapid growth of free trade offshore bonds, leading to stricter regulations that limit issuance to enterprises within the free trade zone and foreign entities [4] - In May 2023, regulatory guidance restricted banks to only invest in bonds issued by enterprises within the free trade zone, resulting in a significant decrease in new issuances [4] Group 3: Financing Opportunities for City Investment Companies - The PBOC's push for free trade offshore bonds is seen as a response to the need for debt rollover and a way to provide stable, diversified RMB financing channels for enterprises involved in the Belt and Road Initiative [5] - City investment companies facing challenges in domestic financing and USD bond issuance may find new financing options through free trade offshore bonds, provided they have overseas infrastructure project assets or can rely on overseas income for repayment [6] - Despite regulatory tightening, the market for city investment companies' offshore bonds showed resilience, with a significant increase in issuance expected in 2024, driven by the need to address domestic funding gaps [7]