Chinese authorities are stepping up efforts to help private companies raise financing as bond investors become increasingly wary of buying corporate debt amid slowing economic growth, disruption caused by Covid-19 lockdowns, and rising default risks, reports Caixin.
The country’s interbank bond market regulator on Tuesday announced the launch of a bond financing support tool for privately owned enterprises, known as the CSIPB, which offers a series of credit protection instruments—financial derivatives such as credit risk mitigation warrants, credit-linked notes and credit enhancement guarantees—that will compensate bondholders in the event of a default.
“(The move) sends positive policy signals to support bond financing by privately owned enterprises and will boost market confidence regarding investing in their bonds,” said a statement issued Tuesday by the National Association of Financial Market Institutional Investors (NAFMII), the self-regulatory body of the interbank market backed by the central bank.