New | China’s top planning agency streamlines issuance of certain corporate bonds
National Development and Reform Commission simplifies approval procedures for high credit rating issuers
China’s top economic planner has taken a substantial step towards letting market forces play a role in corporate bond issuance, publishing a new guideline governing the approval procedure for companies’ debt sales.
The National Development and Reform Commission (NDRC) said on its website on Wednesday that issuers of bonds rated AA+ or higher can skip a second review process.
It also removed the quotas for AA issuers such as town-level governments and companies.
The new rule is aimed at facilitating local governments and companies’ fundraising activities amid a slowing economy and the leadership’s efforts to deepen a market-based reform in the finance sector.
“It is a move to make the bond issuance a market-driven system with the NDRC relinquishing part of its power in reviewing the applications,” said Gu Weiyong, Gu Weiyong, chief executive of Shanghai-based Ucon Investments. “The old rule did appear to be outdated and rigid.”
On the mainland, the NDRC, the central bank and the securities regulator have the power to review and approve bond sales on the interbank market and the stock exchanges.
The NDRC governs the issuance of non-financial corporate bonds known as “enterprise” bonds, which are issued by institutions affiliated to central government departments, local government-related institutions, state controlled enterprises, and other large-sized state-owned entities.
