China is considering setting up an over-the-counter trading platform for exchange-listed bonds, Caixin reported, as the nation evolves its debt markets to handle the biggest corporate liabilities in the world.
The China Securities Regulatory Commission (CSRC) is preparing for the possible venture, in which the Shanghai and Shenzhen bourses might each hold a 50 percent stake, the magazine reported on its Web site, citing people it did not identify. The platform would aim to attract banks and other institutional investors, according to the report.
Chinese authorities are seeking new financing and trading channels as the nation’s companies grapple with a corporate debt load that had risen to US$14.2 trillion at the end of 2013, according to a Standard & Poor’s report in June last year. The amount of outstanding bonds in the nation rose to 28.8 trillion yuan (US$4.6 trillion) as of Jan. 31, of which 4.6 percent is on the exchange-traded market and 93 percent is on the interbank market regulated by the People’s Bank of China, data from China Central Depository & Clearing Co show.
“China’s bond market is regulated by a number of authorities, which is partially why we’re seeing lots of innovations lately,” Industrial Securities Co (興業證券) Shanghai-based chief bond analyst Qunshan Gao (高群山) said.
The CSRC did not immediately reply to an e-mailed request for comment on the report.
A person who answered the telephone at the Shenzhen stock exchange said no one was immediately available to comment after business hours. A call to the Shanghai stock exchange went unanswered.
The CSRC last month said it would allow more companies to sell bonds, as growth in the world’s second-biggest economy slows to the least in more than two decades. The regulator, which governs notes traded on the Shenzhen and Shanghai exchanges, said it would allow all companies to sell notes, including non-listed Chinese corporations, according to a statement posted on its Web site on Jan. 16.
“The success of building an over-the-counter platform will depend on whether it can attract the biggest bond investors: commercial banks,” Guotai Junan Securities Co (國泰君安證券) Beijing-based bond analyst Zhang Li said. “It would be a long process and the market can’t be built within a short time.”
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