The central government loosened regulations on corporate bonds in draft rules
published yesterday and expects the corporate market to expand as a
result, the Financial Times
reported. New rules transfer the oversight of corporate bonds by
publicly listed companies from the National Development and Reform
Commission (NDRC) to
the China Securities Regulatory
Commission (CSRC). In the past, corporate bonds functioned like bank bonds,
and only a few state-owned enterprises were allowed to issue bonds through a quota system
set by state commercial banks. The shift to the CSRC will eliminate the existing quota system and allow market
mechanisms to control bond and interest rate fluctuations, requiring
assets to come from companies instead of banks. Over 90% of China's corporate financing currently comes from bank loans. This
transfer is intended to expand to all companies with viable corporate
structures, eventually leaving only large SOEs with bank bonds under
the NDRC's oversight. Total corporate bond issuance last year was US$13.76
billion, and so far this year it has reached US$13 billion.
Categories