Zheneng Jinjiang Environment plans to issue up to CNY1B in asset-backed securities in China

Fountain gardenFountain and garden

Zheneng Jinjiang Environment Holding said Wednesday its wholly owned subsidiary Hangzhou Jinhuan Investment plans to establish an asset-backed securities (ABS) program in mainland China to issue up to 1 billion yuan, or around S$210.5 million, in securities.

The proceeds are earmarked for repaying borrowings and other debt obligations, working capital and construction and expansion of new projects, the company said in a filing to SGX.

“ABS are well-suited to the unique characteristics of the waste-to-energy (WTE) industry in the PRC, including the stable cashflows, long concession periods and strong government support for the WTE industry and carbon-neutral and ‘green’ issuances of ABS,” Zheneng Jinjiang Environment said in the statement.

“The proposed ABS Issuance can diversify the financing channels of the group, reduce the cost of outstanding borrowings of the group’s existing WTE and other projects and enable the group to tap on favourable regulatory policies in the PRC given that the group’s projects
qualify for green ABS accreditation,” the company added.

The ABS program is Zheneng Jinjiang Environment’s first asset securitisation project in China, the company said.

The issuance is expected to include a senior ABS tranche of up to 950 million yuan, or around S$200 million, which will be subscribed by qualified investors in China, and will be listed on the Shenzhen Stock Exchange, the filing said.

In addition, the offering will include a subordinated ABS tranche of up to 50 million yuan, or around S$10.53 million, which will be subscribed by Hangzhou Jinhuan Investment, the filing said.

The underlying assets for the issuance will be receivables in the form of electricity supply fees and waste treatment fees of two of the Zheneng Jinjiang Environment’s waste-to-energy (WTE) project companies in China, the filing said.

The companies, which are held under Hangzhou Jinhuan Investment, are Yinchuan Zhongke Environmental Electrical Co., which operates the Yinchuan Zhongke WTE Facility in Ningxia Hui Autonomous Region and Yunnan Green Energy Co., which operates the Xishan WTE Facility in Yunnan Province, the filing said.

Hangzhou Jinhua and Zheneng Jinjiang Environment will be responsible for any shortfall in principal and expected income of the senior ABS, the filing said.

The tenure of the ABS issued under the program is up to nine years, the filing said.

China Great Wall Securities was appointed as the manager for the ABS program and for the proposed issuance, the filing said.