Deeper reform of enterprise bond registration

China will further deepen reform of the enterprise bond registration system in line with the new Securities Law, the National Development and Reform Commission said on Wednesday.

In recent years, the commission has taken measures on the prevention and resolution of major risks, and has attached great importance to the risk prevention of enterprise bonds, according to Meng Wei, spokeswoman for the commission.

The NDRC has insisted that funds of enterprise bonds must be linked to certain projects to ensure efficient use of funds and prevent funds from “running idle.” 

Meanwhile, it has enhanced communication and coordination with the People’s Bank of China, the Securities Regulatory Commission and other relevant departments, promoted information disclosure and unified law enforcement, optimized the system, and jointly guarded against and defused potential risks in the bond market.

The commission also strengthened coordination with local governments and developed efficient working coordination mechanisms.

In general, the risk prevention work of enterprise bonds is in a good condition, Meng said. To date, the cumulative defaults in China’s enterprise bonds amounted to 8.14 billion yuan (US$1.2 billion), accounting for only 0.2 percent of the overall stock of enterprise bonds, which was the lowest level among debenture bonds, playing a positive role in promoting the stable and healthy development of the bond market.

For the next step, the commission pledged to further push forward reform of registration-based enterprise bond issuance, strengthen information disclosure and supervision during and after bond issuance and trading, and to promote enterprise bonds to better serve the real economy.

“We will continue to optimize regulatory rules and promote the establishment of an open, transparent and efficient registration and management system for enterprise bond issuance,” Meng said.