BEIJING, March 2 (Xinhua) -- Shanghai Clearing House (SHCH), a qualified central counterparty (QCCP) in China's interbank market, released an interim directive to perfect treatment of bond default and related risks Monday, reported Xinhua-run financial information platform Xinhua Finance.
SHCH said the directive is applicable to bond issuers and holders developing treatment plans for defaulted bond and bond with default risks and filing for core registration factors change and write-off registration with SHCH.
Included herein are core registration factors change such as bond maturity extension and coupon rate adjustment and the following repayment and write-off registration, reporting of canceling put provision exercising, and replacing the defaulted bond with new bonds as well.
SHCH also reminds in the document bond holders of the bond transfer risks by their issuers so as to avoid coincidence of the actual bond interest payment date and bond transfer settlement date.
The Shanghai-based clear house defines bond default as a bond issuer failing to repay in full amount the principal or interests of related bonds on due date, including those incapable of timely full bond repayment because of in-advance maturity of related bonds caused by statutory or contracted reasons such as the bankruptcy law.
Bond default risk treatment refers to the circumstances under which bond issuers have significant uncertainty in paying back the full bond principal and interests on required date, according to SHCH.
Currently, SHCH, also one of the central securities depositories in China, provides clearing services for bonds, interest rate derivatives, foreign exchange and exchange rate derivatives, and commodity derivatives. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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