Latest News:  
Beijing   Cloudy/Overcast    27 / 20 ℃  City Forecast

English>>China Business

Private firms see surge in bonds

By Li Qiaoyi (Global Times)

08:35, September 26, 2012

China's private enterprises reported a big increase in their issuance of corporate bonds during the first eight months of the year amid a boom in the country's corporate bond market, which has bucked the trend of an overall sluggish financing environment, the official China Securities Journal reported Tuesday, citing latest figures from a central bank-backed agency.

From January to August, private enterprises issued a total of 153.56 billion yuan ($24.33 billion) worth of various types of bonds via the country's interbank bond market, an increase of more than 40 percent compared with the previous year, according to data from the National Association of Financial Market Institutional Investors, the newspaper reported.

The number of private companies issuing debt financing instruments for non-financial business also went up 34 percent year-on-year to 177 by the end of August, according to the association.

"Bond issuance helps cut financing costs for enterprises, and is attractive especially for smaller private companies which have been struggling to cope with the economic downturn," Lu Zhengwei, chief economist at Industrial Bank Co in Shanghai, told the Global Times Tuesday, while noting that the strong growth seen in private enterprises' bond issuance remains overshadowed by State-owned enterprises' predominance in the corporate bond market in terms of debt issuance.

"Investors are generally more concerned over buying private enterprises' bonds, as they have less access to credit information about privately owned firms," Lu remarked, urging the establishment of a modern, transparent enterprise information system for the private companies for a clearer picture in the corporate bond market.

The country's small- and medium-sized enterprises (SMEs), the very source of the economy's vitality, are increasingly open to direct financing. However, the country's immature direct financing environment compared to developed economies still presents barriers to SMEs' access to the bond market, said Zhou Dewen, president of the Wenzhou Council for the Promotion of Small and Medium-sized Enterprises.

In addition to the interbank bond market, the Shanghai Stock Exchange began a trial program in June allowing the issuance of high-yield "junk bonds" by Chinese SMEs on a fixed-income trading platform, introducing a new category of bonds to offer aid to cash-thirsty private enterprises.

The "junk bonds" are widely used in developed economies such as the US and Europe for corporate financing.

"But as far as I know, some enterprises' eagerness for the new type of bonds has cooled down due to the exchange's demand for certain amount of collateral or equity capital," Zhou told the Global Times Tuesday.

The government should further lift the bar on direct financing accessible by smaller private enterprises, which have long been reliant on bank loans, Zhou suggested.

News we recommend:
China, US battle over auto parts New Silk Road future of trans-Eurasian freight Islands 'purchase' hurts major industry sectors
Global mobile brands find lines busy in China Tough times in the bicycle rental business Gearing up for knowledge economy
Grape expectations from Argentina  New hurdle for Japan's carmakers Secrets of a successful PE firm

Email|Print|Comments(Editor:厉振羽、张洪宇)

Leave your comment0 comments

  1. Name

  

Selections for you


  1. Weapons in PLA videogame Glorious Mission

  2. Mad mud carnival in Turkey

  3. Crackdown uncovers market malpractice

  4. Athletic stars' wedding

  5. Retired swimmer Zhou Yafei's wedding photos

  6. Take the iPhone 5 apart

Most Popular

Opinions

  1. Aircraft carrier brings timely morale boost
  2. Palestine faces difficulties amid Arab upheaval
  3. Theft of Diaoyu Islands risks China-Japan trade ties
  4. Japan defies post-war int'l order, China's goodwill
  5. Tokyo's stance on Diaoyu Islands 'unacceptable'
  6. Supervision shields officials from graft
  7. Microsoft wisely teams with Beijing to fight piracy
  8. Japan needs examination of wartime aggression
  9. Is Chinese economy sliding into dangerous position?
  10. Naval expert: Aircraft carrier will play a major role

What's happening in China

First police sports games held in Jilin

  1. New generation of workers demands more respect
  2. Breast cancer mortality rate rising in China
  3. Suspect sought in college killings caught by police
  4. Xi'an police pressure rioters to surrender
  5. Gold moon cakes not about the glitter

China Features

  1. How to pan for gold in cultural investment fever
  2. How are elegant Miss Etiquettes 'produced'?
  3. Co-production helps Chinese films go global
  4. Caution: Traps behind credit card use
  5. A visit to world's oldest Buddhist pagoda

PD Online Data

  1. Ministry of Water Resources
  2. Ministry of Railways
  3. People's Bank of China
  4. Ministry of Health
  5. Ministry of Culture