BEIJING, March 29 (Xinhua) -- National Association of Financial Market Institutional Investors (NAFMII) released an announcement on March 26 to cancel compulsory rating arrangements for debt financing vehicles, reported Xinhua Finance on Monday.
NAFMII, a self-regulatory organization established upon approval of the State Council to propel development of China's over-the-counter (OTC) financial market, said in its circular that enterprises to issue debt financing instruments are not compulsorily required to provide rating reports and rating tracking arrangements for their planned bonds in materials used for issuance registration with NAFMII.
NAFMII also removed requirements on compulsory disclosure of bond rating reports during related offering process, but reserved requirements for disclosure of rating reports of issuers of related debt financing vehicles.
Under such circumstances, the liquidation order of the principal and interests of related debt financing vehicles lies behind that of the general debt and ordinary bond products. If the liquidation order arrangements are likely to cause rating of debt financing vehicles to drop below the issuer rating, issuers are still required to disclose their bond rating reports.
NAFMII said that the announcement, which takes effect from Monday, is applicable to debt financing vehicles such as super short-term commercial papers, short-term commercial paper, and mid-term notes, excluding asset-backed notes and project revenue notes.
For foreign non-financial enterprise issuers, requirements over information disclosure of their debt financing vehicles are in line with the above requirements for domestic issuers, according to the NAFMII announcement.
For private placements of the debt financing vehicles, no changes are made to the previous rating-related information disclosure requirements. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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