Junk-bond market helps access to funds
By Richard Fu |
May 23, 2012, Wednesday
|
Print Edition
Print Edition
CHINA will launch its junk-bond market next month as part of a government effort to expand access to credit for its many small, private cash-strapped companies.
According to rules issued by the Shenzhen Stock Exchange yesterday, all unlisted small Chinese companies, other than property and financial firms, can sell bonds via the bourse.
But issuers must offer interest rates that don't exceed three times the benchmark lending rate for the bonds with a maturity of at least one year, the exchange said. Companies can register with the bourse for the proposed market from today.
Junk bonds, or speculative-grade bonds, have higher risk of default but typically pay higher yields.
According to rules issued by the Shenzhen Stock Exchange yesterday, all unlisted small Chinese companies, other than property and financial firms, can sell bonds via the bourse.
But issuers must offer interest rates that don't exceed three times the benchmark lending rate for the bonds with a maturity of at least one year, the exchange said. Companies can register with the bourse for the proposed market from today.
Junk bonds, or speculative-grade bonds, have higher risk of default but typically pay higher yields.
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