China interbank market to expedite debt sales

China's interbank market regulator plans to ease short-term financing rules and allow more companies to simplify their bond sales procedures, three people with knowledge of the matter told Reuters.
The move comes as the interbank market faces increasing competition from the stock exchange as a venue for bond sales, and as Beijing broadens funding channels for companies struggling in a virus-hit economy.
The National Association of Financial Market Institutional Investors (NAFMII) plans to relax rules for the sales of short-term bills and medium-term notes, allowing more companies to issue debt with maturity of less than 12 months, the people said.
More specifically, NAFMII plans to scrap rules requiring that outstanding liabilities of issuers of such debt be lower than 40% of the company's net assets.
The move comes after a new securities law, which came into effect on March 1, allowed companies to sell bonds with maturity of less than 12 months on the stock exchange, potentially competing with the interbank market in this segment.
The rule changes, "whether it's about competition, or about helping to blunt the impact of the virus, are not bad for the market," said a source.
NAFMII also plans to expand the number of companies it considers to be of "quality", as such companies enjoy a more streamlined process in bond sales. The number of such first-tier companies will be increased to about 300 from 110 currently, a source said.
China has been facilitating debt financing to help companies ease tight cash flow as the virus outbreak causes disruptions to business and threatens to hit Chinese exports hard.