The China Securities Regulatory Commission (CSRC) will be able
to approve the issuance of bonds with durations above one year by
Chinese listed companies, according to a draft rule published by
the CSRC.
According to the rule, companies listed overseas as well as on
the Shanghai and Shenzhen exchanges will be able to issue such
bonds.
The CSRC posted the draft rule on its official website to
solicit opinions about the long-awaited reform.
The CSRC has been studying a new efficient mechanism of issuing
corporate bonds to develop the largely neglected market since
December. The move is aimed at bolstering the undeveloped
bourse-based bond market as soon as possible.
Corporate bond issuance at present is approved by the National
Development and Reform Commission, which sets quotas each year. The
central bank sets the limits on the coupons of the debt. The bond
also has to get the approval for listing from the CSRC and the
bourse.
The approval process usually takes a year to 18 months to
complete.
Shang Fulin, chairman of the CSRC said in January that the
development of the corporate bond market would be the commission's
priority in 2007.
The draft rule said companies with net assets of 1 billion to
1.5 billion yuan or more would be able to issue bonds without bank
guarantees under the new rules. The total number bonds a company -
excluding financial firms - can issue should be no more than 40
percent of its net asset, it said.
The regulator's determination to boost the bond market, however,
did not affect the stock market's performance yesterday.
The Shanghai Composite Index ended the day up 2.56 percent to
4,176.479 points, after climbing as much as 2.98 percent at one
point.
It was the seventh consecutive daily rise, bringing the index
within 4 percentage points of an all-time high hit on May 29, just
before authorities raised the stock trading tax to cool
speculation.
The regulator had approved the launch of new mutual funds to
cool the robust rebound, but upward momentum was too strong to be
stopped.
Authorities might try again to cool the market, but it could
prove more difficult this time since stocks rebounded after the
last tumble, analysts said.
(China Daily June 14, 2007)