Greater transparency on bond repayment rules in Shanghai

The Shanghai Stock Exchange has said that it has made changes to the rules in its nascent bond markets to handle occasions when bond issuers repay principal in installments.

The Shanghai Stock Exchange (SSE) has made changes to the rules for its nascent bond markets. When bond issuers repay principal in installments, the bond positions held in the investors’ accounts will remain unchanged, with the nominal value of a single lot of bonds reduced correspondingly.

The SSE requires bond issuers to publish an announcement before making such repayments in this ways. The data to be provided will include; the record date, repayment scheme, calculation method for nominal value, method for adjusting opening reference price, and a change to the bond name’s abbreviation.

The first bond with this type of installment repayments will be for Changchun Urban Development, with its repayment ratio being 30% of the issuance amount, and the repayment day being March 10, 2014. The nominal value of this bond will be reduced to RMB70 after the installment repayment. This act will be recorded on the SSE bond market for both Changchun and similar debt issues in future – with the mark ‘PR’ attached to the instrument.

The exchange said that these changes are in line with the China Securities Regulatory Commission’s requirements for the ongoing development of the country’s bond market.