To resolve the proble上海千花坊articipating in the prog
ram may harm banks’ capital adequacy, regulators will support banks to issue perpetual de
上海千花坊bt – a type of debt without a maturity date – to replenish their capital. Foreign investors will also be allowed to own st
akes in the financial investment firms that take part in the debt-for-equity swaps, the guideline said.
Meanwhile, the guideline said that good-quality and com上海千花坊女神会所
petitive companies with high leverage ratios will be encouraged to participate
in the program and the country will step up efforts to enhance asset pricing of swaps.
上海千花坊Various measures will also be unveiled to lower corporate leverage and properly handle the debt issues of loss-making “zombie c
ompanies”, the guideline said, urging financial institutions to keep monitoring the risks of corporate debt.
Li Longhai, an analyst at Dongguan Securities Co上海千花坊女神会所
Ltd, said that the measures will help banks offload distressed debt from their
balance sheets and will help ease the pressure from the rising nonperforming loans.
“It will also benefit private companies and help them resolve debt risks. And it could sav
上海千花坊女神会所e companies that have strong growth potential but are in temporary difficulties,” Li said in a research note.
As of June 30, the contract value of the debt-for-equity swap program reached 2.4 trilli
on yuan ($350 billion) with about 1 trillion yuan already in place and ready for investment. The value of new contr上海千花坊
acts of debt-for-equity swaps signed in this year reached 390 billion yuan, according to the NDRC.
上海千花坊女神会所Zeng Gang, deputy director of the National Institution for Finance and Developmen
t, said: “The debt-for-equity swaps will improve the financing ability of companies, reduce
their borrowing costs and boost their profitability as well as their business sustainability.”
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