New data indicates that China has seen a sharp rise in corporate bond issuance this year, amidst efforts by Chinese regulators to keep the economy afloat in the wake of the COVID-19 pandemic.
Figures from Wind published on 19 August indicate that China has seen 2160 corporate bond issues since the start of 2020 worth 1.96 trillion yuan (approx. USD$283.19 billion) in total.
Analysts say that the Chinese government is providing greater support to the financing needs of small and medium-sized enterprises, and that the corporate bond registration system is on track to see further improvements.
The China Securities Regulatory Commission (CSRC) recently issued the “Notice on Public Solicitation of Opinions on Amendments to the ‘Corporate Bond Issuance and Transaction Administrative Measures'” (关于就修订<公司债券发行与交易管理办法>公开征求意见的通知).
The amended version of the Administrative Measures removes the original requirement under Article 19 that the public issuance of corporate bonds requires “credit assessment performed by a credit assessment agency with qualifications for securities operations.”
They also remove requirements in relation to average investors participating in subscription transactions for publicly offered bonds, expunging the need for AAA assessments.
Analysts said to state media that these adjustments will not only help to reduce the bond market’s dependence on these assessments, and deal with the problem of “inflated assessments.”
It will also drive credit assessments to return to their original role of providing investors with a means of identifying credit risk and giving advance warnings.