Debt Financing Overview - Hong Kong Stock Exchange (HKEX) debt financing is a crucial tool for managing capital structure, focusing on types of instruments, issuance conditions, regulatory requirements, process design, and risk control [2] Types of Debt Financing - Debt financing tools for HKEX-listed companies are categorized into public market debt and private market debt, with public market instruments being the mainstream, including corporate bonds, convertible bonds, perpetual bonds, asset-backed securities, and other tools [2] Issuance Conditions - Public issuance requires compliance with HKEX Listing Rules, typically necessitating a credit rating, while private placements have lower thresholds and simplified disclosure requirements [2][3] - Key characteristics of various debt instruments include fixed or floating interest rates, repayment terms, and market liquidity [2] Core Issuance Process - The debt financing issuance process consists of four main stages: preparation, regulatory approval, roadshow pricing, and post-issuance management [3] Regulatory Requirements - HKEX and the Hong Kong Securities and Futures Commission (SFC) regulate debt financing to protect investor interests and maintain market order, with rules including HKEX Listing Rules and SFC regulations [3][4] Financial Health and Governance - Companies must meet financial metrics outlined in HKEX Listing Rules and demonstrate sound corporate governance to qualify for debt financing [4] Common Terms Design - Key terms in debt instruments directly affect the rights and obligations of issuers and investors, including conversion terms for convertible bonds, redemption rights for perpetual bonds, and covenants for corporate bonds [6] Recent Trends - Growth in green and sustainable debt is notable, with HKEX promoting green finance initiatives, leading to a 35% year-on-year increase in green bond issuance in 2023, reaching HKD 120 billion [6][7] - Digital issuance is on the rise, with HKEX launching an electronic IPO platform to enhance efficiency [7] - There is an increasing focus on ESG factors, requiring issuers to disclose more ESG-related information [8] - Companies are favoring long-term debt issuance in a low-interest-rate environment to lock in favorable rates [9] Conclusion - The core of debt financing for HKEX-listed companies is balancing financing costs and risks through the selection of appropriate instruments, adherence to stringent regulatory requirements, and attention to market trends, ultimately aiming for optimized capital structure and enhanced shareholder value [12]