The mainland's high-yield-bond market launched yesterday as Suzhou Huadong Coating Glass successfully sold 50 million yuan worth of two-year debt at an annualised interest rate of 9.5 per cent on the Shanghai Stock Exchange.
The bond offering will open the floodgates for thousands of small- and medium-sized companies to raise much-needed funds as Beijing provides them with an alternative financing channel.
The Shanghai bourse said in a statement that seven companies, including Huadong Coating, had been allowed to offer the riskier high-yield bonds since yesterday.
The plan to launch the high-yield bonds - junk debt offered by lower-grade firms - was unveiled in February. China Securities Regulatory Commission (CSRC) chairman Guo Shuqing saw in it a way to bolster cash-hungry small businesses.
It took only three months for the plan to materialise - unusually quick for the mainland's securities industry, which has spent nearly a decade preparing for the creation of a Nasdaq-style start-up board.
The fast-tracking of the junk debt market reflects the efficiency of the CSRC under Guo, a reform-minded technocrat who took office last year.
'The quick launch was no easy job because there were worries about the small firms' solvency,' said Gang Meng, a ratings director at Dagong Global Credit Rating. 'More liberalisation of the mainland bond market are expected during Guo's tenure.'