Chinese Regulators Moved to Ease Several Restrictions
Chinese regulators moved to ease several restrictions in corporate debt issuance in their efforts to reduce dependency on bank loans and further reduce the net market impact of new rules that is cracking down on the practices that is created to evade lending restrictions. These regulators hope that by allowing more corporations to issue debt in the bond market or tap into the funds directly to allow companies to gain access to credit without looking into bank loans.
This will give the central bank the latitude in cracking down the explosive growth of complex transactions that are used by banks through interbank exchanges that might risk damaging the economic growth. By easing, the regulatory efforts hopes to balance the policy while tightening supervision on credit. They also hope that by easing will not hurt the reforms that are intended to boost the bond market and direct fundraising. The easing also introduced new policies coming from multiple ministries that have overlapping mandates.
Furthermore the China Securities Regulatory Commission will be retaining its authority in approving or denying plans of listed firms that continues to issue company bonds, while the National Development and Reform Commission will continue to approve application from non listed companies and on financial firms that are issuing company bonds.