Bond rules eased for 'key' investment sectors

Regulators have simplified the requirements for bonds issued to finance clean energy projects, as well as those in senior care, underground pipelines and other emerging sectors, as the government attempts to bolster investment amid a flagging economy.

In documents released on Thursday, the National Development and Reform Commission, the top economic planner and regulator of State-owned enterprises' bond issues, said that it will streamline the process of approving such issues.

The sectors involved in the new announcement include the seven "key investment sectors" identified by the NDRC in December: Internet infrastructure, health and senior-care services, environmental protection, clean energy, food and water, transportation and ancillary services for oil, natural gas and mining.

The NDRC singled out the senior-care industry, urban parking lots and underground pipeline networks and issued specific guidelines for them.

For example, funds raised could be used by local governments' SOEs to establish senior-care facilities or buy State-owned hospitals, schools and rehabilitation centers and transform them into such facilities.

Banks should help these businesses issue bonds and assist them with traditional lending, the NDRC said in online statements.

The economy grew at its weakest pace since 1990 last year and most likely achieved even slower growth in the first quarter.

Luo Guosan, deputy director-general of the investment department of the NDRC, said in January that the "seven key investment sectors" clearly indicate China's direction for future investment.

He denied a report by Bloomberg News that China is accelerating 300 infrastructure projects valued at 7 trillion yuan ($1.1 trillion) this year, saying that it is difficult to give a number.

SOEs that are not listed on any stock exchange were previously subject to stringent conditions when they sought NDRC approval for bond issues.

For example, SOEs in the urban construction sector faced an upper limit on bond issues. But such companies do not face any ceiling now if they invest in senior-care facilities, and guarantee requirements were also loosened.

"This policy easing is apparently intended to stabilize growth," said Sun Binbin, an analyst at China Merchant Securities Co Ltd.

Song Weijian, an analyst at China Credit Rating Co Ltd, said the loosening is "selective" rather than "across the board", so it should not lead to a glut of corporate bonds.

Further, a key document issued in October tightened controls on debt issues by local government financing vehicles. The latest measures will ease the situation and reduce the liquidity risk of LGFVs.

"The new moves could also draw more private capital into these government-supported sectors," Song said.

zhengyangpeng@chinadaily.com.cn