The China Securities Regulatory Commission (CSRC) and the Shanghai Stock Exchange (SSE) have unveiled a pilot programme for securities companies to issue short term corporate bonds.
The exchange said that securities companies have accelerated their business development in recent years and their financing needs have continuously increased, while their leverage ratios are low and their financing channels are limited.
The issuance of short-term corporate bonds on the exchange’s bond market is therefore a response to the wish of China’s State Council to grow capital markets.
The exchange added that short-term bonds would provide a market-oriented short-term financing instrument for securities dealers, and supplement capital sources for securities companies.
In formulating this pilot scheme for short-term bonds, the SSE solicited market opinions. The scheme will start with stronger securities companies and more issuers will be included on a gradual basis.
After bonds are issued, they will be transferred
among eligible investors through the exchange’s systems. A qualified investor
system will be used. Financial institutions and their wealth management
products, QFIIs and RQFIIs, plus other eligible institutional investors, will all
be allowed to invest.