Monetary: Regulators help ease bond issues

Financial constraints confronting private companies have reflected accumulated economic downturn pressure, unstable market expectations and worsening risk appetite, said the central bank report. “Some private companies have been trapped in debt default risk, further pushing up difficulties for credit financing.”

During the first three quarters this year, 24 private companies incurred bond defaults, losing 67.41 billion yuan ($9.69 billion), according to the central bank. In the same period, total bond issuance from the private sector stood at only 402.9 billion yuan, down 17.6 percent year-on-year.

Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said in a recent statement that new regulations on wealth management products by commercial bank subsidiary companies will be released later this month. That will mobilize more funds raised by wealth management products to support private enterprises.

The latest China Monetary Policy Report also called for strengthening policy coordina- tion, improving the transmission mechanism of monetary policy and making innovations in monetary policy instruments and mechanisms.

The central bank admitted that constraints exist in the structure and within certain fields in the monetary policy transmission.

To address the problem, the central bank has taken targeted measures, including issuing special-purpose bonds for private companies, expanding the range of collateral and precisely reducing the reserve requirement ratio to better support the development of private companies and small and micro enterprises.

Since the beginning of 2018, the central bank has also put into effect a raft of measures to maintain medium and long-term liquidity by cutting the RRR and Medium-term Lending Facility.

The central bank has reduced the RRR four times this year, releasing 2.3 trillion yuan into the market.