China backs bond-financing support tools for private enterprises

BEIJING, Feb. 27 (Xinhua) -- China is supporting the bond financing of private enterprises with good market prospects and competitive technologies, in a bid to help them ease financing difficulties.

By the end of January, 61 debt financing instruments involving 28.52 billion yuan (about 4.25 billion U.S. dollars) had been issued in 13 provinces, including Zhejiang, Jiangsu and Guangdong, official data showed.

In November and December last year, private companies issued bonds of 155 billion yuan, up 70 percent year on year, according to a report from the People's Bank of China.

"With the help of bond-financing support tools for private enterprises, our company raised enough capital, and the interest rates of bonds also fell, which reduced our financing costs and boost our confidence," said Sun Dongming, vice manager of Hongdou Group Financial, a private company in Jiangsu province.

The central bank lawfully provides initial capital support to specialist institutions, entrusts them with operation in accordance with the market and risk prevention principles, to provide additional credit support to those private enterprises that are operating normally and have met provisional liquidity difficulties.

"The introduction of such tools eased institutional investors' fears about private company bonds and boost their willingness to invest," Sun said.

The Hongdou Group raised 1.3 billion yuan through issuing four debt financing instruments. The money was spent to support its clothing and tire manufacturing sectors.

Small and medium-sized firms make up the majority of Chinese companies and are major employers but have traditionally faced difficulties in getting bank loans.

The executive meeting of the State Council held on Oct. 22 last year said that it would "establish support tools for private enterprise bond financing" and use "market-based methods to help solve the financing difficulties of enterprises."

The central bank pledged that it would continue to perfect supporting policies and promote support tools to help more private firms solve financing problems.