China's securities regulator is taking a step closer to launching a high-yield bond market after drawing up a draft rule governing debt issuance by lower-grade companies, a move that will widen access to much-needed capital for thousands of small and medium-sized firms.
The China Securities Regulatory Commission (CSRC) will review the draft rule before submitting the proposal to the State Council for final approval, according to sources.
Guo Shuqing , who was appointed chairman of the CSRC in late October, and who will chair the review of the draft rule, is keen to liberalise the corporate bond market as a way to bolster the mainland's cash-starved small enterprises, the sources said.
Currently, only large companies with credit rating above AA are allowed to issue bonds on the stock exchanges, and unlisted firms seeking debt financing on the bourses are shut out from the market, though corporate and securities laws do not limit bond issuances by small or non-listed companies.
The new CSRC chairman is adamant that the debt market will be liberalised and it is expected that the draft rule wo;; be approved by the regulator soon.
According to the official China Securities Journal, top policymakers will agree to create a high-yield bond market next month after the end of the National People's Congress.