China’s interbank market regulator has banned bond issuers from buying their own debt as it seeks to keep defaults from destabilizing the financial system, reported Caixin.
Issuers shall not subscribe to issuances of their own bonds in the interbank market or buy them indirectly through related parties or asset management products, according to aregulation published Wednesday by the National Association of Financial Market Institutional Investors (NAFMII), a self-regulatory organization for the interbank market backed by the central bank.
The regulation shows how financial regulators are clamping down on “structured issuances” of bonds as many analysts and industry insiders regard it as a threat to the stability of the bond market because it helps financially weak, poorly rated companies increase their risk of default, said Caixin.
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