Reforms to end quotas on issuance of bonds
(Reuters)Updated: 2007-01-29 15:22
Issuance of bonds with maturities above one year must be approved by the National Development and Reform Commission (NDRC), China's top economic planner, while the China Securities Regulatory Commission (CSRC) approves issues of listed firms' convertible bonds and the People's Bank of China is in charge of short-term corporate bills of one year or less.
"The crucial time has come for co-ordinating interests among the government departments," says bond analyst Su Zhenhua at Taikang Asset Management.
"Although it will still take some time to work out the details, we are confident of a breakthrough this year."
Revisions to existing rules, which NDRC has been considering since 2001, are likely to be finalized this year, analysts say.
Authority for approving issuance of long-term corporate bonds could pass from NDRC to CSRC which has been praised for its speedy review and approval of stock offerings, they add.
Quotas for maximum total issuance of long-term corporate bonds, set annually by NDRC and a legacy of decades of economic planning, are expected to be scrapped.
Under the quota system, it typically takes an enterprise 12 to 18 months to get approval and only very large companies can meet the strict requirements, including the securing of bonds with bank guarantees, analysts say.
Industry sources have said NDRC is now studying the quota for this year but most of the bond analysts in a recent Reuters survey believe Beijing will abandon the quota system late this year and allow issues to be reviewed and approved case by case - similar to stock offerings.
The market is also likely to be partially opened to foreigners, probably
through a scheme modelled on the qualified foreign institutional investor
program for the domestic stock market, allowing overseas investors to trade
Chinese corporate bonds for the first time, analysts say.
 | 1 | 2 | 3 |  |
(For more biz stories, please visit Industry Updates)
| ||