CSRC Revises Rules on Corporate Bond Issuance, Trading

Source: Regulation Asia 2020-08-13

One of the main changes is the removal of a requirement for bond issuers to seek credit ratings, which will make it easier for companies to sell debt securities.

The CSRC (China Securities Regulatory) has issued new draft rules on the issuance and trading of exchange-listed corporate bonds.

The draft rules are another step towards fully implementing a new registration-based system for the public issuance of corporate bonds, in line with the new Securities Law that took effect from 1 March.

Under the new system, the stock exchanges – rather than the CSRC – are responsible for the acceptance, review, and registration of corporate bond issuances.

The draft rules clarify the registration conditions, procedures and related regulatory requirements for the public issuance of corporate bonds. Among the conditions, issuers must have a “reasonable asset-liability structure and normal cash flow”.

The rules also clarify the obligations of issuers, underwriters, securities services providers, and trustees in corporate bond issuance, including to establish information disclosure and accountability mechanisms to prevent excessive incentives and low-price competition.

One of the major changes in the rules is to remove a clause requiring bond issuers to seek credit ratings, purportedly aimed at making it easier for companies to sell debt securities.

The removal of the previously mandatory requirement may also in the long run help prevent domestic credit rating firms from issuing often-inflated grades under pressure from borrowers, according to analysts cited by Bloomberg.

The draft rules, available here, are open for comment until 6 September 2020.

corporate bonds

China Securities Regulatory Commission

provider

Regulation

go public

CSRC Revises Rules on Corporate Bond Issuance, Trading

Subscribe to Our Newsletter!

Subscribe to Our Newsletter!