Securities Regulator Commits to Better Bond Financing Channels for Private Chinese Enterprises

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The China Securities Regulatory Commission (CSRC) has flagged efforts to improve the ability of private enterprises in China to access funding via debt issues.

CSRC said that it planned to “release a series of policies and measures to further broaden the bond financing channels for private enterprises and strengthen the efficiency and quality of services for private economy development,” according to a report from the official news outlet of China’s financial regulators published on 28 March.

Measures highlighted by CSRC include:

  1. Promoting bonds for innovative tech companies. Focused, preferential support for the issuance of bonds to raise funds by private enterprises in the tech sector and strategic emerging industries.
  2. Further optimisation of financial services mechanisms. Inclusion of high-quality private enterprises that satisfy conditions in a list of well-known, mature issuers, increasing the efficiency of financing.
  3. Employing the role of market-based credit enhancement. Encouraging market entities and policy entities to use the creation of credit protection tools to provide credit enhancement support to bond financing by private enterprises. Launching combined-model credit protection contractual operations as soon as possible.
  4. Improve the convenience of repo financing mechanisms. Appropriately loosening entry thresholds for the use of bonds issued by credit-protected private enterprises as repo collateral.
  5. Encourage securities funds to expand their investments in private enterprises. Including relevant private enterprise bond indices in securities company assessments and specialist business rankings.
  6. Strengthening promotion and advertising. Pushing for “face-to-face” exchanges between investment entities and private enterprises, to increase mutual understanding and trust.
  7. Raising the quality of information disclosures and strengthening the full-process information disclosures for private enterprise bonds.

CSRC said that the next step would be to “further employ the active role of capital markets in supporting private enterprise development, and gathering together the forces of parties to the market to jointly service private economy bond financing, on the foundation of upholding market-based principles.”