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Economic planner sets corporate bond quota

(Shenzhen Daily)
Updated: 2007-02-15 14:38

The country's top economic planner has set a 2007 quota of 98.7 billion yuan (US$13 billion) for the issuance of corporate bonds with maturities of more than one year, underwriting sources said yesterday.

The limit is higher than 2006 and would mark record issuance for a second year in a row.

The National Development and Reform Commission (NDRC) will give 95 firms a portion of the quota, more than doubling the number of firms compared with 2006 and indicating that smaller companies will be allowed to issue the bonds, the sources said.

"The quota and the company list have been reported to the State Council," said a source, adding the State Council rarely made changes to the NDRC quota.

NDRC is responsible for approving the issuance of corporate bonds of durations of more than one year.

It set a quota limit of 60.8 billion yuan in 2006.

NDRC can also approve special issues, such as a 40 billion yuan one by the Ministry of Railways late last year that pushed actual 2006 issuance to a record high of 99.5 billion yuan, up more than 50 percent from 65.4 billion yuan in 2005.

Some companies may not fulfill their bond quota.

There are increasing signs that the government has been easing restrictions on corporate bond issuance over the past two years to soak up excess liquidity in capital markets and to meet calls by a large number of companies, particularly small- and medium-sized firms, for more funding outlets.

The central bank launched a corporate bill market in May 2005 for debt of one year or less. Issuance doesn't require NDRC approval.