(Yicai Global) Nov. 17 -- China’s bond market faces new challenges in averting and defusing major risks from a variety of factors both at home and abroad, and the country’s state planner will closely attend to interest payments and principal redemptions of bonds against singular risks that may occur or which are in their initial stages and urge the formulation of resolution plans to protect investors, it said today.
China's National Development and Reform Commission will focus on enhancing its efforts in three steps in the next phase, Meng Wei, its spokesperson, told a press conference.
This latest regulatory push comes after two major recent bond defaults by state-backed enterprises sent a shudder through markets.
The first measure will be to stiffen regulation of corporate bonds through project and risk screening, supervision and inspection to avert and defuse the hazards inherent in these instruments, Meng said.
Second is to enhance communication and coordination among corporate credit bond authorities, craft an efficient cooperative mechanism, enhance information disclosure, tighten unified law enforcement, improve system construction, and promote unified market disclosure rules, she stated.
Third is to devise a risk prevention and control system for early detection, warning, discovery and disposal to enable understanding of these perils in advance and deal with them as soon as possible, Meng added.
China's credit bond market has yielded a slew of bad news of late. Since the breaking accounts of bond defaults by Brilliance Auto Group and Yongcheng Coal & Electricity Holding Group, the credit bonds of many companies such as Tsinghua Holdings, Yunnan Metropolitan Construction Investment Group, Jizhong Energy Group, Suning.Com, and Tsinghua Unigroup have begun to plummet, with declines ranging from a few points to dozens and the current price of some varieties dropping to about CNY10 (USD1.51).
The face value of Chinese bonds is CNY100.
Editor: Ben Armour, Xiao Yi