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Some Thoughts on the development of China's corporate bond market

Author: WangLiFang From: www.yourpaper.net Posted: 2009-03-30 14:45:15 Read:
[Abstract] corporate bond market development is an important part of a country's capital market development, rapid and healthy development of China's corporate bond market has become the consensus of all aspects. Bottleneck restricting the development of China's corporate bond market and obstacles in this article from the three main angle analysis of the corporate bond market issuers, investors, intermediaries, and make recommendations accordingly.
[Keywords] corporate bonds; private enterprises; qualified institutional investors; credit rating

A business to survive, development is inseparable from the support of funds. Sources of corporate funds in addition to its own accumulation, equity financing and debt financing, debt financing can be divided into the issue of bank loans and corporate bonds. Compared to bank loans, bond financing has the advantages of low cost; compared to equity financing, corporate bonds have the advantage of the interest tax deductible. A long time, China's enterprises mainly rely on bank loans to facilities long and short-term funds. Part qualified companies to the stock market in China to develop the stock market, IPO and SEO, financial got a lot of money for enterprise development. However, the corporate bond market as a "short board" of the capital markets, has been not been fully developed. Compared to the stock market, the market share of China's corporate bond market is very small, even in the inside of the bond market, the share of corporate bonds is also far lower than government bonds and policy financial bonds. In 2004, China's capital market equity financing of $ 151.094 billion yuan, the issuance of treasury bonds amounted to 692.39 billion yuan, policy financial bonds issued amounted to 414.8 billion yuan, while corporate bond issuance amounted to only 32.7 billion yuan. The development of the corporate bond market lags behind, from the microscopic point of view will lead to deformity of the capital structure of the Chinese enterprises, is not conducive to the sustainable development of enterprises and the improvement of the corporate governance structure; From a macro point of view, unreasonable financing structure of China's financial markets will lead to the financial system the implied excessive risk, may bring more serious consequences to the country's socio-economic development. Break the institutional constraints of the development of the corporate bond market, and focus on the development of the corporate bond market has become a top priority of deepening the reform of the financial system in China.

First, the main issue: to relax restrictions on the main issue of the corporate bond market, allowing qualified credit conditions for private enterprises to issue corporate bonds

Make standardized laws and regulations of China's corporate bonds are mainly three Corporate Bond Management Regulations "," Company Law and the Securities Law, Corporate Bond Management Ordinance which was enacted in 1993, "is the main basis for regulation . The 2005 revision of the "Company Law" was canceled on the main provisions of the corporate bond issuance the original Co., Ltd., a wholly state-owned company, two or more state-owned enterprises to set up limited range of requirements. Corporate Bond Management Ordinance Article still provides for the allocation of corporate bonds issued by the departments concerned implemented as planned. Management model of administrative examination and approval of the corporate bond market, leading corporate bond issue size is not from the financing needs of the enterprise itself, but from the government's plan to issue bonds enterprises are mainly concentrated in the energy, transportation, utilities have a relative monopoly large state-owned or state-controlled enterprises, private enterprises are difficult to place in the corporate bond market.
Since the reform and opening up, China's private enterprises has always maintained a trend of rapid development. After 30 years of development, private enterprise has grown into a considerable part of the strength of large enterprise groups, such as the Lenovo Group, New Hope Group. According to the National Bureau of Statistics, 2005, above-scale industrial added value of 6.6425 trillion yuan, which the domestic private economy in the above-scale industrial added value was 2.1385 trillion yuan, accounting for the country accounted for 32.2%. Despite good asset operational capability and financial condition, the ability to repay principal and interest due for the subsequent development of the enterprises, but due to the presence of institutional constraints, private enterprises are also difficult to raise funds by way of the issuance of corporate bonds, inject new Blood. Private corporate debt funds constitute, directly to the community lending and by borrowing the "money", "lift would", "standard will be," RCAs and underground banks and other private financial institutions to the community, from the official capital market financing is almost zero. While such private lending positive way, but also to the security and stability of our financial brings considerable risks.
The development and growth of private enterprises and private financial activities of the active and has laid the foundation for the further expansion of the corporate bond market. If you can be relaxed, the main limitation of the issuance of corporate bonds in institutionally correct fair market position of private enterprise, allowing credit conditions qualified private enterprises to become the main issue of the corporate bond market, can produce a win-win situation. For businesses, the development of enterprises can bring a stable long-term funding sources, reduce financing costs, while ensuring the right to control not be dispersed, and the promotion of enterprises to improve corporate governance, and thus build public trust in business. Can increase the corporate bond market, the main issue in the market, to enhance the breadth and depth of the market. Investors more investment objects to choose from, to meet the needs of different risk preferences of investors.

Second, the main body of investment: investment entities to qualified institutional investors in the corporate bond market, enhance creditor protection

(A) QIB (qualified institutional buyers) is the principal investors in the corporate bond market. All along, our investors in corporate bonds targeted at individuals and small and medium-sized institutional investors. For example, "Corporate Bond Management Ordinance non-commercial banks will absorb the deposits for the purchase of corporate bonds to prohibit commercial banks to become investors in corporate bonds. Corporate bond investment body positioning error directly inhibit the development of the corporate bond market. Poor ability of individuals and small and medium-sized institutional investors, risk analysis, risk-taking capability is weak, in order to guard against the risk of default on corporate bond issuance management departments to adopt stricter controls, such as the channels on the main issue of the eligibility issue size, the use of funds raised limit and forced guarantee, these measures have greatly hindered the development of corporate bond market.
Corporate bonds as a fixed-income securities, with relatively stable cash flow. But its high transaction costs, at the same time, the pricing of corporate bonds need a wealth of expertise, a lot of information collection and processing work, so investors are demanding higher difficult for individuals and small and medium-sized institutional investors to play to our strengths in the corporate bond market. From the international market, the corporate bond market is mainly targeted at institutional investors. In the United States, more than 90% of the stock of the corporate bond market is held by the insurance companies, mutual funds, commercial banks and other institutional investors, individual investors generally the way indirect investment through the purchase of bond funds and bond trust the corporate bond market. Asian emerging market countries is also to institutional investors as the principal investors in the corporate bond market. In Korea, major investment in corporate bonds artificially investment trust (Investment Trust Company, referred to as the ITC). 2002, the ITC, including financial institutions to buy 88.45% of the balance of corporate bonds in 1998-2002, while the proportion of individual investors to invest only 1.62%. In Thailand, institutional investors to invest in 2002, 89.76% of newly issued corporate bonds to retail investors to buy a share of 10.24%. Description of the experience of mature foreign corporate bond market, the development of China's corporate bond market, investment entities should reposition market deregulation allows qualified institutional investors to become the main force of the corporate bond market investment.
(B) strengthening investor protection measures to safeguard the interests of creditors. Compared to stock investment, the possible loss of its corporate bonds, up to the entire investment. Stock investment gains are unlimited, but returns to investors of corporate bonds is relatively limited and stable. Compared to the stock market, the development of the corporate bond market higher requirements for the legal environment. Only the rights of creditors to be clearly defined and get real protection, investors will have a strong willingness to buy. Therefore, improve the legal environment for the rapid development plays a vital role in the health of the corporate bond market. The strengthening of the protection of the corporate bond investors, it is imperative to standardize the relevant laws and regulations, such as corporate bonds Management Ordinance, the Bankruptcy Law, a clear corporate bankruptcy boundaries, establishing the status and interests of the creditors of the company went bankrupt. In addition, you can also learn from the foreign creditor protection system, such as the bondholders' meeting system.
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