Fitch welcomes new bond rules in China

Fitch Ratings said it welcomes the draft regulations introduced June 12 by the China Securities Regulatory Commission relating to domestic bond issuance in China.

The reforms proposed under the draft regulations have the potential effect of making domestic bond pricing more transparent and driven by credit fundamentals, the agency said. This is likely to lead to greater credit differentiation and consequently drive the need for better corporate disclosure, due diligence processes and credit ratings as independent evaluations of creditworthiness, Fitch said.

To diversify away from the traditional reliance on guarantees provided by banks, steps are being taken to encourage bonds to be secured by the corporate issuer's assets. This in turn reinforces the importance of a sound insolvency regime to provide bond investors with comfort that they are able to obtain some recovery value from the security assets in case of bond defaults, Fitch concluded.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.