By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2007-09-13 15:05

Time is ripe for China to launch corporate bonds and furthermore, the interest rate hike expectations won't affect the trial issuance of bonds, according to Tu Guangshao, vice chairman of the China Securities Regulatory Commission (CSRC), the Shanghai Securities News reported today.

Tu said the CSRC would let foreign firms issue corporate bonds in China when the appropriate time arises.

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Tu also said the development of corporate bonds can help improve the direct financing percentage and develop a multi-layer capital market.

According to a rule released by the CSRC to guide the issuance of corporate bonds last month, only companies listed overseas and on the Shanghai and Shenzhen exchanges are allowed to issue corporate bonds. A number of companies have put forward plans for corporate bonds issuance.

Tu stressed that interest rate hike expectations won't impact long-term development of corporate bonds, although it will affect different listed companies' issuance times.

The CSRC will encourage companies to issue corporate bonds by different means to allow more investors to participate in the market.

Trust companies can act as trustees when entering the corporate bonds market, Tu said. They are expected to have more opportunities in the corporate bonds businesses as the market develops.

Currently, only a handful of large State-owned enterprises approved by the National Development and Reform Commission can issue such bonds. The price and amount of bonds issued are decided by the commission, and the State commercial banks are also required to underwrite the bonds.

Just 283.1 billion yuan (US$37.5 billion) of corporate bonds had been issued by the end of last year, accounting for only 1.35 percent of gross domestic product, far lower than the 40 percent in the United States and 17 percent in the Republic of Korea.