China Places Cap on Private Corporate Bonds to Stem Credit Risks
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China’s securities regulators are taking steps to curb private bond issuance in a bid to contain credit risks at the nation’s weaker firms.
The China Securities Regulatory Commission and stock exchanges in Shanghai and Shenzhen have sent a window guidance to some brokerages to keep the outstanding value of privately sold corporate bonds on exchanges at or below 40% of issuers’ net assets, according to people familiar with the matter. New bond sales exceeding this ratio should only be used to repay old debt.