China will allow small to medium enterprises (SMEs) to sell
junk bonds under a pilot scheme which aims to broaden the range
of financing for businesses struggling for funds. But market
participants expect the move to have a limited impact.
In an online statement released
this week, the Shenzhen Stock Exchange (SSE) said bonds could
be issued from June through private placements to qualified
investors. Bonds must have maturities of one year or longer and
the coupon should not exceed three times the central
bank’s benchmark interest rate, the SSE said.
Property and finance companies are to be excluded from the
scheme, and no more than 200 investors are allowed to take part
in any placement.