After years of relying on bank loans, Chinese companies will finally use corporate bonds as a viable form of debt financing in 2008. Issuance will be limited to domestic companies for now, but many think that multinationals and their counsel could soon be granted access. Crucially, the absence of a bank guarantee could drag issuing companies' disclosure standards up.
China's corporate bond market has been feeble for too long. So in January 2007, when rumours emerged of a regulatory switch from the country's conservative National Development and Reform Commission (NDRC) to the more liberal China Securities Regulation Commission (CSRC), potential issuers rejoiced.
It took longer than expected. Throughout 2007 China's gradualist approach to market reform prevailed, with minor successes, ineffective tweaking and no news of the regulatory switch. Over in Hong Kong, the first Renminbi-denominated bond was issued on the island, with China...