PPN is a non-public directional issuance, which refers to an act that a non-financial enterprise with legal personality issues a debt financing tool to a specific institutional investor in the interbank market, and at the same time circulates and transfers it within the scope of the specific institutional investor. Debt financing instruments issued in banks through non-public directional issuance are called non-public directional debt financing instruments.

1. Formally speaking, public offering is to recruit unspecified investors after registration. Its issuance conditions are usually standardized so that non-specific investors can participate in the subscription. Directional issuance is to issue financial products to specific investors, and the negotiations between the issuer and investors are basically completed before registration.

2. The biggest difference between directional issuance and public issuance is that directional issuance further strengthens the independent consultation mechanism between issuers and investors, embodies the principles of marketization and freedom of contract, and is a higher level of market opening and market constraint.

3. In terms of the design of negotiation mechanism, the issuer and investors of directional issuance have negotiated and confirmed the Agreement on Directional Issuance. The terms in the agreement, such as interest rate, term, information disclosure method and refinancing, are more flexible and personalized, which is beneficial for issuers and investors to meet individual needs.

4. In terms of market pricing, the issue price, interest rate and related interest rate of non-public directional tools follow the self-discipline rules and are determined according to market methods. Compared with publicly issued debt financing instruments, there is a certain liquidity premium.

5. In terms of the restraint mechanism, non-public offering can give full play to the contractual consciousness of independent negotiation of market participants, reduce prior control, no longer force credit rating, and leave some micro-responsibilities of risk prevention to investors for independent decision.

6. In terms of market development momentum, non-public issuance of directional financing instruments does not specify the product structure in detail, encourages market members to innovate independently, and forms a sustainable market innovation momentum by guiding market participants to innovate spontaneously.

with the expansion of China's bond market, how to further enhance the market function has become a key concern of relevant functional departments. According to the development experience of American bond market, the improvement of market function will mainly come from the optimization of market investor structure. The hierarchical and orderly investor structure can not only improve the market operation efficiency, but also accommodate a variety of debt financing tools.

Non-public development tools play an important role in deepening market functions and improving market structure. The issuance of non-public directional financing instruments can attract risk-oriented investors such as private equity funds to enter the market, activate the trading enthusiasm of non-financial institutional investors, attract a large number of institutional investors to enter the non-public directional issuance market, further optimize the structure of market investors, gradually change the current situation of relatively concentrated institutional investors in the inter-bank market, and promote the efficiency of market operation while cultivating multi-level investors.

obviously, under the sound monetary policy environment, the private directional issuance market and the public issuance market will be two components that constitute the complementary and coordinated development of China's bond market, which will promote the continuous expansion of the proportion of direct financing in China and further promote the optimization of China's financing structure.