The Shenzhen and Shanghai exchanges published guidelines to tighten the approval of bonds issued on the exchanges by corporates and non-bank issuers. Focus points particularly include corporate governance and disclosure of financial information. For example, if proceeds from issuances are used to repay debts other than corporate bonds, the issuer must reveal the details of the debts and vow that they do not involve hidden local government debt. The exchanges will evaluate if issuers have stable debt structures without aggressive debt loading, stable cash flows and sustainable profits. Also, additional requirements were given to real estate developers and urban construction companies implying that if total assets of the latter are less than CNY 10bn ($1.6bn) or their rating (local agency) is lower than AA, the difficulty of issuing bonds is bound to increase. Similarly for real estate companies, the three-red lines would be a focal point determining financing ability.

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