January 4, 2018 – The first Commercial Mortgage-Backed Medium-termed Notes (CMBN) by a state-owned enterprise on the inter-bank market underwritten by China CITIC Bank Corporation Limited -- “the first batch of Asset-Backed Medium-term Notes in 2017 by Beijing Uni-Construction Real Estate Corporation Limited t” ( “the product”) was successfully issued through the inter-bank bond market.
The product was publicly issued on the inter-bank market totaling RMB 1 billion of a 20 year term (3+2+3+3+3+3+3) with callable windows scheduled on the third, fifth, eighth, eleventh, fourteenth and seventeenth year. Utilizing Special Purpose Vehicle (SPV), it contains two trusts: one single fund trust and an Asset-Backed Medium-term Notes trust. The originator used the beneficial interest of the trust loan that originated from the single fund trust as the underlying assets to issue the Asset-Backed Medium-term Notes (ABN) on the inter-bank market through the Asset-Backed Medium-term Fund as the carrier. Funds for the payment over the maturity of the notes and supporting cash flow will come from the revenue generated from the underlying assets of commercial real estate business.
The product is the first CMBN issued by a state-owned enterprise on the inter-bank market and the first one in Beijing. Compared to other commercial real estate business financing vehicles, CMBN is advantageous in many ways: (1) the transaction structure is more mature and easier to conduct; (2) it allows for public offerings through the inter-bank market and enjoys better liquidity with relatively lower financing cost (3) it is unnecessary to transfer the commercial property ownership so the property owner can keep the premier properties to himself. For those who with multiple commercial real estate assets, CMBS is useful to liquidize the assets and improve the return on investment. It is a highly recommended quality financing strategy to be explored and considered.
As the product’s special legal counsel throughout the entire issuing process, Jingtian & Gongcheng provided effective and quality legal service by designing the transaction structure, drafting the transaction documents, providing the legal opinion, and application forms as well as preparing the issuing registration form.
