Junk bond market kicks off
By Richard Fu |
June 9, 2012, Saturday
|
Print Edition
Print Edition
CHINA has opened its junk bond market by approving the first sales of such high-yield securities yesterday in a pilot program to expand access to credit for its many cash-strapped private companies.
Suzhou Huadong Coating Glass Co sold the first such bond via private placement under the program, the Shanghai Stock Exchange said yesterday. The Jiangsu Province-based company priced its two-year notes to yield 9.5 percent in a 50 million yuan (US$7.8 million) offering.
The Shanghai bourse and the Shenzhen Stock Exchange have approved 16 firms to sell bonds under the program.
Guotai Junan Securities analyst Liang Jing said in a recent note that junk bonds could be a major regular fundraising channel for China's small- and medium-sized companies.
According to rules issued last month, all unlisted small companies, other than property and financial firms, can sell bonds via the bourses but issuers must offer interest rates not exceeding three times the benchmark lending rate.
Junk bonds, or speculative-grade bonds, have higher risk of default but typically pay higher yields.
Suzhou Huadong Coating Glass Co sold the first such bond via private placement under the program, the Shanghai Stock Exchange said yesterday. The Jiangsu Province-based company priced its two-year notes to yield 9.5 percent in a 50 million yuan (US$7.8 million) offering.
The Shanghai bourse and the Shenzhen Stock Exchange have approved 16 firms to sell bonds under the program.
Guotai Junan Securities analyst Liang Jing said in a recent note that junk bonds could be a major regular fundraising channel for China's small- and medium-sized companies.
According to rules issued last month, all unlisted small companies, other than property and financial firms, can sell bonds via the bourses but issuers must offer interest rates not exceeding three times the benchmark lending rate.
Junk bonds, or speculative-grade bonds, have higher risk of default but typically pay higher yields.
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