Direct bond financing by Chinese enterprises has reached 571.228 billion yuan (77.357 billion U.S. dollars) so far this year, up 40 percent from last year, the Shanghai Securities News reported on Wednesday.
The total breaks down into 169.93 billion yuan worth of corporate bonds (including debentures), 330.31 billion yuan in short-term financing bills, 25.82 billion yuan in securitized assets, 26.29 billion yuan in convertible bonds, and 18.88 billion yuan in convertible bonds with warrants. These latter instruments have the dual characteristics of both equity and debt, and their components can be traded separately.
During the nation's annual finance work conference held earlier this year, the government vowed to accelerate the development of the corporate bond market to expand the scale and proportion of direct financing for companies. And earlier this month, the head of China's securities regulator said that the agency would vigorously develop the capital markets to expand direct financing.
Corporate bonds used to be only issued by central- or state-owned or state-held enterprises, and private companies have taken advantage of the growing private-sector bond market throughout the year. A recent corporate bond issue was Beijing Urban Construction's issuance of 500 million yuan worth of 7-year bonds on Nov. 21-27, with a 6.08 percent annual coupon.
The bond market this year also saw the emergence of debentures issued by non-governmental listed companies.
China Yangtze Power Co.,Ltd, the country's largest listed hydropower corporation, issued 4 billion yuan in debentures in September, an issue that was well-received in the market.
Nearly 20 companies have announced planned debenture issues, with a total value of 50 billion yuan.
Longer-term corporate bond and debenture issues will expand further in 2008, to an estimated scale of 300 billion to 400 billion yuan, according to a report by Shenyin & Wanguo Securities Co., Ltd. That figure wouldn't include short-term financing or instruments such as securitized assets.
"As China is set to adopt 'tight' monetary policy in 2008, enterprises will become more dependent on direct financing and banks will also pour funds into the bond market to control risk," said the report.
Source: Xinhua
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