Banking

China launches new commercial debt product

(Agencies)
Updated: 2010-12-22 16:21

SHANGHAI - Three Chinese companies will issue China's first "super and short-term commercial paper" (SCP), Reuters reported Wednesday, citing the National Association of Financial Market Institutional Investors (NAFMII).

China National Petroleum Corp (CNPC), Sinopec Corp and the Ministry of Railways, which operates as a corporation, will issue a combined 210 billion yuan ($32 billion) in SCP, the report said.

SCP are short-term corporate bills of 270 days or less.

Traders told Reuters that CNPC, the parent of Asia's largest oil and gas producer PetroChina, was likely to take the lead in issuing five billion yuan ($751 million) in 270-day SCP on Friday.

"CNPC's auction is provisionally set on Friday, and that will await a final confirmation," a trader said.

NAFMII, which was set up under the People's Bank of China to help regulate China's interbank market in Shanghai, has said it plans to launch a slew of financial products to deepen China's market mechanisms, such as derivatives linked to the yuan's CNY=CFXS exchange rate and interest rates, the report said.

Related readings:  Concerns over debt, rates spook investors  China increases its holdings of Japanese debt  Chinese real estate giants' debt ratio soars

SCP will enrich corporate financing channels, help the central bank promote interest rate liberalization and guide more fund flows into the country's real economy, according to the report.

Under China's complicated corporate debt system, the PBOC only has the right to manage new corporate-related debt in the interbank market, such as already traded short-term bills of up to one year and medium-term bills of mainly three and five years.