Following a regulatory relaxation by the Chinese authorities, unlisted companies can issue bonds on public exchanges, an alternative funding route for high-risk borrowers, after the government clamped down on precarious “shadow banking.” Demand is hot for these products, and the higher the yield, the higher the risk, which is amplified if the fund’s assets are partly bought on credit, or leveraged. In the third quarter , new corporate bond issuance rose to 2 billion yuan , equivalent to just 8 percent of all new credit. However, these bonds are now packaged into high-yielding products offered to desperate investors reeling from the the third quarter stock market crash and real-estate downturn and who trust the big-name backers such as the Agricultural Bank of China and the Agricultural Bank of China . Some analysts worry that the regulatory changes may lead to a repeat of the recent boom-bust cycle.
Following a regulatory relaxation by the Chinese authorities, unlisted companies can issue bonds on public exchanges, an alternative funding route for high-risk borrowers, after the government clamped down on precarious “shadow banking.” In the third quarter , new corporate bond issuance rose to 2 billion yuan , equivalent to just 8 percent of all new credit. However, these bonds are now packaged into high-yielding products offered to desperate investors reeling from the the third quarter stock market crash and real-estate downturn and who trust the big-name backers such as the Agricultural Bank of China and the Agricultural Bank of China . Some analysts worry that the regulatory changes may lead to a repeat of the recent boom-bust cycle.