Stricter Chinese bond rules to hamper weaker companies, says Moody’s

Tighter guidelines on corporate bond issuance in Shanghai and Shenzhen will limit the access of weaker companies to the onshore bond market and also lower their liquidity, suggests Moody’s Investors Service.

A new Moody’s report paints a relatively bleak picture for weaker companies going forward in trying to access the onshore bond market.

The report indicates that stricter guidelines on corporate bond issuance through the Shanghai and Shenzhen Stock Exchanges could potentially push them to turn to higher-cost funding sources.

The tightening follows a steady increase in defaults during the past two years from a low base and a number of high-profile defaults in recent months.

Such restrictions will reduce liquidity for weak companies, said Moody’s, especially given that corporate bond issuance is one of the most common sources of non-bank funding for Chinese companies....

¬ Haymarket Media Limited. All rights reserved.

FinanceAsia has updated its subscription model.

Registered readers now have the opportunity to read 1 article from our award-winning website for free.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team subscription (2-5 users), or office-wide licences.

To help you and your colleagues access our proprietary content, please contact us at [email protected], or +(852) 2122 5222