Coronavirus Bonds

Coronavirus Bonds - in a broad sense, these are bonds and Eurobonds that are issued for the purpose of financing the fight against the COVID-19 pandemic and its consequences. Issuers of such bonds are both governments of different levels (for example, securities of Guatemala, Ivory Coast, China, Madrid) and corporations (for example, issues Banco Bilbao (BBVA), Bank Gospodarstwa Krajowego, Inter-American Investment Corporation).

In a narrow sense, these are bonds that meet certain criteria related to the use of funds raised. Such criteria are illustrated below with the example of China (it is sufficient to meet one of the two criteria in this country):

• at least 10% of the funds raised should be used to counteract the epidemiological situation related to COVID-19: production and sale of medical products, development of the relevant infrastructure, as well as a number of other purposes, while the remaining funds can be used at the issuer’s discretion: to cover operating expenses, return previously borrowed funds, etc.;

• the issuer shall be located in one of the most unfavourable areas in terms of infection spread.

Thus, for the Chinese domestic market, the main purpose of such issues is not (or is not necessarily) to finance the fight against the consequences of the epidemic, but they are associated with the need of the government to attract additional funds to fight the pandemic.

China offers a simplified issuance procedure for Coronavirus Bonds which allows issuers to get funding for their purposes faster than in the case where companies issue ordinary bonds.

Issuers of Coronavirus Bonds in China are both political banks (issue China Development Bank), medical organisations (issue Humanwell Healthcare Group) and issuers not related to government or medicine (issues Kunming Iron & Steel Holding, Shandong Hi-Speed Group).