Yangtze Power

China’s bond market under new management

Newsweek
December 6, 2007

Yangtze Power was not the first Chinese company to issue debt in the domestic market, but the US$540 million it raised through the sale of 10-year bonds — which started trading on the Shanghai Stock Exchange on October 12 — marked the dawn of what could be a dynamic new age for corporate bonds, Newsweek reports.

This is because they were the first bonds released under the China Securities Regulatory Commission (CSRC),
which earlier this year took over management of bonds issued by listed
companies. Corporate bonds previously fell within the remit of China’s
central planning agency, the National Development and Reform Commission
(NDRC), which restricted bond issues to a handful of state-owned
enterprises (SOEs). The agency has, however, retained control of
enterprise bonds, which are issued by non-listed firms.

The fundamental benefits of selling bonds were outlined by Yangtze Power director Zhang Cheng at the issuing ceremony in Shanghai. Yangtze Power is saving money and minimizing its risk by borrowing from the market rather than from a bank: A 10-year bond represents a far cheaper and more stable source of financing than a bank loan that rolls over year-by-year.

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