(Yicai Global) Sept. 3 -- Deutsche Bank and BNP Paribas have become the first foreign-invested lenders in China to be given type A licenses allowing them to act as lead guarantors for corporate debt issued by non-financial firms.
The move was announced by the National Association of Financial Market Institutional Investors yesterday. Previously, such licenses were only awarded to large domestic banks and brokers.
New measures to further open up China's financial markets were taken by the State Council's Financial Stability and Development Committee in July. These include permitting eligible foreign-invested banks to become type A lead underwriters for all types of bonds, not just overseas corporate debt, issued by non-financial firms.
In China, lead underwriters for debt financing instruments by non-financial firms are divided into two types, A and B. Type A guarantors can carry on business nationwide, while type B are restricted to a specific area, usually where their business is registered.
So far, six foreign lenders have been issued class B licenses: Deutsche Bank China, HSBC Bank China, Standard Chartered Bank China, JPMorgan Chase Bank China, BNP Paribas China and Citibank China.
China's non-financial company debt financing instruments include commercial paper, medium-term notes, small and medium-sized enterprises' collection notes, super- and short-term commercial papers, private placement notes and asset-backed notes. They target banks, securities companies, insurance asset management firms, fund companies and other institutional investors in the inter-bank bond market.