China’s nudges ‘high quality’ firms to seek overseas debt funding

China’s “high quality” companies have been encouraged to borrow medium- and long-term debt abroad, amid a contraction in offshore US dollar fundraising for Chinese firms this year following a series of defaults by property developers.

But the companies must comply with several criteria, including compliance with national policies, while their business operations must align with national macroeconomic controls and industrial policies, the National Development and Reform Commission (NDRC) said on Tuesday.

Over the past year, the company’s revenue must rank within the top five in its industry, with debt-to-asset ratio and other financial metrics outperforming the industry average.

The new measures aim to expand “high-level opening up, improve the convenience of cross-border investment and financing, and effectively utilise foreign debt to support high-quality development”, the NDRC said.

China’s top economic planner launched a public consultation in March, pointing to its intention to relax some of the requirements as long as the firms were deemed to be qualified, which would reduce the amount of time needed to raise funds abroad.