Planning body warns on bonds
By Lydia Chen |
July 30, 2011, Saturday
|
Print Edition
Print Edition
CHINA'S top economic planning body has ordered local governments to step up surveillance of corporate bonds amid concerns some firms may try to bypass regulations to issue more bonds.
Companies are required to win approval from bond holders before they restructure any assets while they still have bonds outstanding, China International Capital Corp said, citing a notice from the National Development and Reform Commission.
Companies should also assess their credit rating if they want to carry out such asset restructuring plans, CICC said in a report.
Those ratings must not be lower than the previous ratings if the restructuring is allowed to proceed, it said.
Local economic planners are urged to supervise the repayment of corporate debt and communicate with issuers six months ahead of their scheduled repayment of principal, Reuters reported yesterday, citing unnamed sources.
The NDRC also added that bond proceeds must be used in line with the bond issue prospectus.
The notice was delivered by the NDRC following moves by one of the country's top credit rating agencies, which put two bonds linked to a Yunnan provincial government financing vehicle on review for a possible downgrade earlier this week.
The government-controlled Yunnan Investment Group and Yunnan Electric Power Investment were put on watch for a possible downgrade on Wednesday by Chengxin International, a credit ratings agency that is 49 percent owned by Moody's.
Companies are required to win approval from bond holders before they restructure any assets while they still have bonds outstanding, China International Capital Corp said, citing a notice from the National Development and Reform Commission.
Companies should also assess their credit rating if they want to carry out such asset restructuring plans, CICC said in a report.
Those ratings must not be lower than the previous ratings if the restructuring is allowed to proceed, it said.
Local economic planners are urged to supervise the repayment of corporate debt and communicate with issuers six months ahead of their scheduled repayment of principal, Reuters reported yesterday, citing unnamed sources.
The NDRC also added that bond proceeds must be used in line with the bond issue prospectus.
The notice was delivered by the NDRC following moves by one of the country's top credit rating agencies, which put two bonds linked to a Yunnan provincial government financing vehicle on review for a possible downgrade earlier this week.
The government-controlled Yunnan Investment Group and Yunnan Electric Power Investment were put on watch for a possible downgrade on Wednesday by Chengxin International, a credit ratings agency that is 49 percent owned by Moody's.
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