Regulator Raises Bar for Privately Placed Bonds
China’s top securities watchdog recently raised the bar for companies issuing bonds through private placements.
The move is the latest sign that the China Securities Regulatory Commission (CSRC) is tightening its grip on the corporate bond market in the wake of several default scandals that undermined investor confidence.
The CSRC barred the country’s brokerages from underwriting privately placed bonds for companies whose key subsidiaries have defaults on their records, and to shelve issuances for companies that have received warnings or fines from stock exchanges or self-regulatory bodies within the last six months, according to a regulation amendment sent to securities firms on Jan. 15. Caixin has seen the document.
A key subsidiary refers to a unit that accounts for more than 30% of its parent company’s total assets, net assets or operating revenues.
The regulation, first drafted three years ago to improve the fundraising method used by small and midsize companies, listed 15 cases in which companies can be barred from selling privately placed bonds, four more than the previous version in 2015 (link in Chinese).
The latest regulation also prohibited companies from using funds raised through privately placed bonds to make financial investments, which analysts say is a shot across the bow of enterprises that put betting on the financial markets ahead of their main businesses.
Source close to the CSRC told Caixin that the amendment will have a limited impact on the market because securities companies have already been following the requirements through window guidance.
Notably, the amendment followed the default of a 1.1 billion yuan privately placed bond from electronics manufacturer Cosun Group., in which the company colluded with its underwriting bank to fabricate loan-guarantee documents so it could issue the bond.
Contact reporter Leng Cheng (firstname.lastname@example.org)
Mar 04 05:33 PM
Mar 04 12:46 PM
Mar 04 12:32 PM
Mar 03 06:28 PM
Mar 03 06:17 PM
Mar 03 04:26 PM
Mar 03 12:26 PM
Mar 03 11:59 AM
Mar 02 05:33 PM
Mar 02 02:05 PM
Mar 01 07:02 PM
Mar 01 07:00 PM
Mar 01 05:03 PM
- 1Wuhan Gives Up on Troubled $18.5 Billion Chipmaking Project
- 2Corporate Contributions to Social Insurance Funds Slashed by $200 Billion in 2020
- 3Shanghai Wants Half of New Car Sales to Be Pure Electric Vehicles by 2025
- 4Gallery: Lantern Festival Lights Up End of Lunar New Year
- 5Cover Story: The Green Finance Challenge Facing China’s Banks
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas