SHANGHAI (REUTERS) - China said on Wednesday it would allow the issuance of bonds for individual projects for the first time, in another official step to develop the country's debt market and boost corporate fund-raising amid a slowdown of the world's second-largest economy.
With immediate effect, issuers can apply to the National Development and Reform Commission (NDRC) to sell bonds if the proceeds will be devoted to one specific project, according to new rules published by the country's top economic planner.
Previously, bond issuance was only permitted for the expansion of an issuers' business and those targeting a number of projects.
"The new rules are promulgated to expand the scale of direct funding and let the capital markets play a better role to serve the real economy," the NDRC said in a corresponding statement. "Project bonds", as the new type of debt is called, can be sold either to the public or via private placements, according to the rules.
When they are sold privately, no more than 200 institutional investors are permitted for one bond, and each such investor must buy at least 5 million yuan (S$1.1 million) worth of the bond.
The issuance must be underwritten by qualified underwriters and must be rated by relevant rating agencies, among other provisions.
The rules do not specify who will be qualified as issuers of the project bonds. While industrial companies will apparently dominate the list, local governments are also likely to become active participants so as to fund regional infrastructure projects, analysts said.
Beijing is keen to speed up infrastructure spending as the economy slows, though huge funding pledges are rarely followed with details.