Convertible Bonds: Will the Market Respond?

Recent regulations have been issued by the China Securities and Regulatory Commission to clarify the procedures that govern the issue of convertible bonds. Only a small number of companies in China have issued convertible bonds - will these new regulations do enough to boost this figure in the future?

On April 26 2001, the China Securities Regulatory Commission (CSRC) promulgated the Issue of Convertible Bonds by Listed Companies Implementing Procedures (Implementing Procedure), which took effect on the same day. At the same time, the CSRC promulgated three supplementary rules1.

In the four years since the promulgation of the Administration of Convertible Company Bonds Tentative Procedures (可转换公司债券管理暂行办法 ) in 1997, no other major legislation has been issued on the subject. A review of the history of the development of the convertible bonds market in China and an analysis of the provisions of the Implementing Procedures would be worthwhile in gaining an understanding of the impact of the new regulations on future developments of the market.