21:24, 12-Feb-2018
Local Gov't Debt Clampdown: No more borrowing through disguised corporate bond issuing
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For a look at China's new corporate bond rules. Companies' bonds can no longer help with local governments' financing, and the government will not take responsibility for companies' debt, either, top regulators said on Monday.
The new rules aim to separate debt burdens between companies and government, that's part of Beijing's efforts to reduce country's systemic risks. Chinese companies selling bonds must publicly state that the funds raised do not add to local government debt.
Local governments, too, must stick to their budgets when spending, and will no longer guarantee any financial support for companies in debt troubles. The regulators also said rating agencies should not link the credit ratings of companies with local government debt.