Top planner lays rules for firms on bonds

CHINA'S top economic planner yesterday defined the requirements for unlisted companies to issue bonds as part of widespread moves to bolster the bond market.

The National Development and Reform Commission will stop reviewing applicants on a case-by-case basis. Instead, the agency will grant a license if companies meet certain financial and management requirements, said a statement on the NDRC's Website.

Shareholding companies, incorporated in the Chinese mainland, should have net assets not lower than 30 million yuan (US$4.1 million) before they could issue bonds, while limited liability companies need to have net assets of 60 million yuan.

The accumulated net debt issued should not exceed 40 percent of the company's net assets while its profit over the past three years should be able to pay the debt's one-year interest.

The rate of bond should be decided by the market, but under a limit set by the State Council.

Companies which have violated regulations in the past three years can't issue bonds.

"It will be a significant step towards market-oriented approvals of bond issuance," said a government source who declined to be named.

China's corporate bond market had been supervised by the NDRC, which has an opaque system for approving new issues. Many companies used to complain that the quotas were largely reserved for state companies.