Bonds Sep 17

NDRC takes credit for low corporate bond default rate of 0.2%

8.14bn yuan of defaults considered ‘good’ by top-level development authority

NDRC takes credit for low corporate bond default rate of 0.2%

(ATF) National Development and Reform Commission (NDRC) spokesperson Meng Wei said the risk prevention of China’s corporate bonds is “good".

"Up to now, corporate bonds have defaulted 8.14 billion yuan, accounting for only 0.2% of the total stock of corporate bonds,” Meng said, adding this has played a positive role in promoting the stable and healthy development of the nation’s bond market.

Meng said that in recent years, the NDRC has implemented the decisions and deployments of the Communist Party Central Committee, the State Council, and the Financial Committee of the State Council on preventing and resolving major risks, and has always attached great importance to corporate bond risk prevention.

Firstly, the NDRC insists that corporate bonds must be linked to projects that ensure efficient use of proceeds, prevent the "idling" of funds, and ensure the security of repayments.

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Secondly, the NDRC will strengthen coordination and cooperation with local governments to "build an efficient work coordination mechanism" and promote early investigation and prevention of risks.

Thirdly, the NDRC established a risk prevention system for early identification, early warning, early detection, and early disposal and to study, judge and dispose risk as soon as possible.

Fourthly, the NDRC has strengthened communication and coordination with the People's Bank of China, the China Securities Regulatory Commission (CSRC) and other relevant departments, strengthened information disclosure and unified law enforcement, improved the system of construction and jointly prevents and resolves potential risks in the bond market.

The Economic Daily reported that in June the NDRC, the PBoC and CSRC  issued the "Notice on Issues Concerning the Disposal of Corporate Credit Bond Defaults" to actively build a market-oriented and legalised bond default resolution mechanism.