Recent regulatory moves signal that China is committed to improving corporations' access to debt capital markets to reduce their reliance on bank financing, said a report from Fitch Ratings.
The People's Bank of China (PBOC) announced on May 26 it will simplify the administrative procedure for newly issued bonds to trade in the interbank market. The National Development and Reform Commission (NDRC), in a separate move, reduced the barriers to entry for interbank enterprise bond issuers on May 27. Enterprises are allowed to fund up to 70 percent of a project through bonds, compared with the previous 60-percent limit. Fitch said the changes underscore the Chinese government's continued efforts to expand the onshore debt capital market, particularly the corporate bond market.
A maturing corporate bond market provides corporations with alternative means of fund-raising, especially non-state-owned companies, which traditionally have less access to bank financing, and could help ease downward pressure on the economy.
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