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Nation mulls allowing foreign firms to issue yuan bonds
(Shanghai Daily)
Updated: 2007-03-02 14:03  The government will permit large foreign firms to issue yuan-denominated bonds to help reduce capital inflows and so ease upward pressure on the yuan, a senior official said in remarks published Thursday.
Only two international organizations, the Asian Development Bank and the International Finance Corp, the private lending arm of the World Bank, have so far been allowed to sell yuan debt. Xu Lin, head of the department of fiscal and financial affairs at the National Development and Reform Commission (NDRC), the main economic planning agency, gave no timetable for the reform. Writing in Money China magazine, Xu said the government would take steps to boost the corporate bond market by simplifying issuance procedures. These are tightly controlled by NDRC, stunting the volume of new bonds. Between 1987 and 2006, corporate bond issuance totaled just 430 billion yuan (US$55.5 billion). But Xu said the immaturity of China's markets, reflected in poor corporate governance and an underdeveloped credit culture, meant the agency would not fully liberalize the market. Flagging another reform, Kong Linglong, head of NDRC's department of foreign capital utilization, told the magazine that the government would allow domestic companies to start issuing foreign currency-denominated debt inside China within the next 5 years. (For more biz stories, please visit Industries)
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