The National Development and Reform Commission has Requested to Carry out Risk Screening on SOE Bond Payment, and a Seminar will be Held in the Middle of the Month.

Category：Industry News         Release Time：2019-09-05         Number of Browse：0

China's recent credit default cases have increased. According to the disclosure of three sources on Wednesday, National Development and Reform Commission, the regulatory authority for SOE bonds, recently issued another notice requiring issuers, underwriters, Development and Reform Commissions around the country, etc. to carry out risk screening of principal and interest payments for SOE bonds and to strengthen information disclosure during their existence.   

    Sources quoted the notice issued by the National Development and Reform Commission on March 30 and said that SOE bond issuers should conduct self-examination on the preparation of principal and interest payment this year and form a self-examination report for submitting before April 15. At the same time, the National Development and Reform Commission will hold a seminar in mid-April on screening the risks of principal and interest payment for SOE bond.

    The contents of the report include: sources of debt service funds; the construction of investment projects and the use of funds raised; whether to collect and transfer debt service funds to the special account for debt service as agreed in the prospectus; performance of important business contracts and recovery of receivables, etc..

In addition, the notice also made clear the assignments of responsibilities for risk screening among the lead underwriter, provincial Development and Reform Commissions, trusteeship institutions, rating agencies, etc. and simultaneously made clear the disciplinary measures against agencies which do not reach the standards.

    Among them, when rating agencies downgrade the rating or adjust the rating outlook to negative, the notice requires rating agencies to report to the National Development and Reform Commission and the provincial Development and Reform Commissions for filing in a timely manner. Reuters could not immediately contact the National Development and Reform Commission to comment on the news.

    Weak economic fundamentals in China have further increased the pressure on enterprises operation. This year, China's credit debt in exposure at default is expected to be even more serious than last year. Since the beginning of the year, there have appeared Shandong Sunnsy Cement Group Co., Ltd., Yunfeng Group, Guangxi Nonferrous, Nanjing Yurun and other default cases.

    Due to different regulatory authorities in China, bonds issued by enterprises are mainly divided into three parts: First, SOE bonds audited by the National Development and Reform Commission are issued in the inter-bank market and the stock exchange across market; second, debt financing instruments of non-financial corporate audited by the Central Bank, including ultra-short financing, short financing and medium-term note, are only issued in the inter-bank market; third, corporate bonds audited by the China Securities Regulatory Commission are issued on the Shanghai and Shenzhen Stock Exchanges.

                                                                                                                                                        (Information Source: Reuters Chinese News Service)