Bonds News
- Corporate bonds to be traded among banks
Date: 14-Sep-2007 Sources: (Shenzhen Daily)
CHINA will allow bonds issued by listed firms to be traded both on the stock market and in the interbank market, a senior regulator said Wednesday.
The government gave long-awaited approval last month for the China Securities Regulatory Commission (CSRC) to take charge of the issuance of bonds by listed firms with tenors of at least a year.
But the authorities did not make it clear at the time where the bonds would be traded.
'On a pilot basis, corporate bonds will be allowed to be issued on both the stock exchange and in the interbank market,'Tu Guangshao, a CSRC vice chairman, said.
Analysts say permitting trading among banks is vital to ensure sufficient liquidity for a thriving secondary market in corporate bonds because buyers of exchange-listed bonds typically hold them to maturity.
Tu said his office was working with other government agencies to make interbank trading possible and to permit banks to buy listed bonds.
Domestic banks are currently prohibited from buying listed securities.
Tu also said the CSRC would let foreign firms issue corporate bonds in China when the time was ripe.
The CSRC was also discussing with the insurance regulator allowing domestic insurers to buy corporate bonds that are not guaranteed by banks, a feature of the new market regime.
'The insurance regulator gave us a very active reply,'Tu said.
Under the market's old rules, overseen by the National Development and Reform Commission (NDRC), bond issuers had to obtain a bank guarantee.
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