RULES GOVERNING EXCHANGEABLE BONDS BROADEN INVESTMENT CHANNELS

November 10, 2008 | BY

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The China Securities Regulatory Commission (CSRC) has released new measures allowing shareholders of listed companies to issue exchangeable bonds. “The…

The China Securities Regulatory Commission (CSRC) has released new measures allowing shareholders of listed companies to issue exchangeable bonds.

“The new trial regulation provides a way to shareholders of listed companies to realise their share values,” said Gary Lock, managing partner at Herbert Smith. “It also provides a cheaper way to issuers to raise funding as the additional exchange mechanism will entail a discount on the coupon rate.”

The regulations, issued on October 19, require a listed company's net assets must be at least Rmb300 million, while setting out the maximum issue size of exchangeable bonds to be no more than 70% of the underlying shares' market value.

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