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BIZCHINA / Center
Shenzhen bourse to apply full price on corporate bond transaction
(Xinhua)
Updated: 2007-09-21 10:51
Shenzhen Stock Exchange is to apply same-day trading and full price
transaction of corporate bonds with no daily fluctuation limit, according
to a circular released on Thursday.
It said corporate bonds could be bought and sold in the same day in spot
trading and accrued interest would be included in the price of a bond in
the quoting process.
So far, eight companies have prepared to issue corporate bonds worth 30
billion yuan (US$3.99 billion) with maturities from three to ten years.
Based on overseas experience, interest rates of corporate bonds are
usually two percentage points lower than the five-year bank loan rate.
The annual yield of ten-year corporate bonds should reach 5.25 percent
under the current circumstances, according to industry insiders.
The government last month issued rules allowing firms to issue corporate
bonds on a trial basis in a long-awaited move to expand fund raising
channels and bolster the country's fledgling debt market.
Under the new regulatory arrangement, Chinese companies listed in
Shanghai, Shenzhen or overseas will be allowed to sell corporate bonds
with maturities of more than a year.
These firms need no bank guarantees for their debt sales and can use the
proceeds to repay loans, among other purposes.
Previously, the National Development and Reform Commission, China's
economic planning agency, was in charge of vetting applications by
domestic companies that issued debt of longer than a year.
But the issues needed bank guarantees and were largely limited to the big
state-owned enterprises, which could only use the proceeds in designated
investment projects.
(For more biz stories, please visit Industry Updates)
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