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The finance committee sets the tone: properly manage the relationship between promoting development and preventing risks to promote the sustainable and healthy development of the bond market
Our reporter Ma Ling
November 21, Liu He, the CPC Central Committee, vice premier of the State Council Development Financial Stability Committee (hereinafter the “Finance Committee”), director chaired the forty-third meeting of the finance committee to study the development of bond market standards, maintenance bonds Stable work in the market.
Everbright BankIn an interview with a Financial Times reporter, Zhou Maohua, an analyst at the Financial Markets Department, stated that this meeting will speak quickly in response to recent bond defaults, clarify the direction of bond market development “market-oriented, legalized and internationalized, “will strengthen market restriction mechanisms and severely punish illegal violations, to ensure the healthy development of bond market rules, helping to stabilize market sentiment, pushing to improve the national system, boost confidence of investors in the domestic bond market long-term healthy development of the specification.
Balancing the relationship between promoting development and preventing risks
Since the end of October, many companies such as Brilliance Automobile Group Holdings Co., Ltd., Yongcheng Coal and Electricity Holdings Group Co., Ltd. have unexpectedly experienced bond defaults by the market, and the relevant effects have continued to ferment.
The meeting indicated that the recent increase in default cases is the result of cyclical, institutional and behavioral factors.
Zhou Maohua analyzed that the recent defaults on these bonds have objective factors as well as their own problems, mainly due to the sudden outbreak of the epidemic, the slowdown in the macroeconomy and the continued slowdown in the commodity market, which has caused some industries and companies suffer a long-term drag on their operations and pressure on cash flow; However, when it comes to the company itself, the unbalanced structure of assets and liabilities, insufficient hematopoietic capacity, and imperfect internal governance have resulted in an unstable financial situation and weak risk-fighting capacity.
To promote the sustained and healthy development of the bond market, the meeting pointed out that to insist on maintaining the stability of the general tone of work, in accordance with the market, the rule of law, international principles, manage the relationship between good and promote development and risk prevention.
Zhou Maohua said, handle the relationship between pro-development and anti-risk, as long as the healthy development of market regulation, you need to accelerate the improvement of the relevant rules of the market system and the clear obligations of the parties, the responsibility compaction of the parties and strengthen the market supervision and discipline mechanism, in addition Sanctions for major violations of laws and regulations protect the legitimate rights and interests of investors and make market development more predictable.
“In fact, each set of predetermined events is a reminder of the market, it will help implement more reforms.” Lin Jia, a researcher at China Europe International Business School, believes that recent events remind us of the default in payment to break the rigid, should also promote the corresponding policies, Establish a risk rating mechanism with open and transparent information , so that the bond market can reasonably assess credit risks.
It should be noted that default is an inescapable phenomenon in the gradual maturity of the bond market, the risk of default in the bond market and its impact must be viewed objectively and rationally. The “China Financial Stability Report 2019” previously issued by the People’s Bank of China stated that the default of a single bond is conducive to improving the credit risk pricing mechanism, accelerating market compensation, promoting economic adjustment structural and breaking sticky payments. However, if bond defaults erupt on a large scale, they will also undermine financial market confidence and affect the normal financing function of the bond market. Therefore, we must follow the premise of the market, the principle of the rule of law, a robust plan to address measures to safeguard the legitimate interests of bond investors against the risk of bond default that spreads systemic risk.
Further compact the responsibilities of all parties
The meeting required that financial regulatory authorities and local governments should start from the general situation, resolutely maintain the authority of the legal system, implement regulatory responsibilities and territorial responsibilities, and urge various market entities to strictly comply with their responsibilities and establish a good local financial ecology in accordance with the requirements of the comprehensive rule of law. And credit environment.
Zhou Maohua said that the credit bond market involves issuers, investors, intermediary service agencies and supervision. These institutions are irreplaceable in the market. For each link to be organically connected, it is necessary to strengthen supervision and containment, clarify the obligations of all parties, and consolidate each. Party responsibility, letting the credit bond market become a place for price discovery and efficient resource allocation, and promoting the formation of a virtuous circle between finance and the real economy.
Meng Wei, spokesman for the National Development and Reform Commission, recently stated that the next step is to make the most of the advantages of local land management to deal with debt risks and handling defaults, and do a good job. in the region through project selection, risk investigation, supervision and inspection, etc. Supervision of corporate bonds works to prevent and resolve risks in the corporate bond sector. Meanwhile, to strengthen coordination and communication between company management and credit bonds, build an efficient work coordination mechanism, strengthen information disclosure, strengthen unified law enforcement, improve system construction, promote unified bond market disclosure rules, jointly preventing and defusing potential bond market risk.
In addition, the meeting clearly pointed out that it is necessary to strengthen industry self-discipline and supervision, and strengthen market restraint mechanisms. Various market entities, such as bond issuers and their shareholders, financial institutions and intermediary institutions, must strictly abide by the laws, regulations and rules of the market, adhere to professional ethics, be diligent, honest and worthy of trust and effectively prevent moral hazards.
Regulatory attitude of “zero tolerance” continues
The meeting pointed out that it is necessary to maintain a “zero tolerance” attitude to maintain justice and market order. China Postal Savings Bank researcher Lou Feipeng suggested that the system should be improved in terms of credit rating, information disclosure, investor education, etc., not just to break the rigid redemption in the direction of commodification and legalization. , and allow market defaults, but also to prevent malicious “debt evasion”. , Protect the legitimate rights and interests of investors.
Industry experts generally believe that the bond market also belongs to the capital market, and that the “zero tolerance” regulatory attitude also applies to the bond market. The meeting clearly and strictly investigated various violations of laws and regulations in accordance with the law and severely sanctioned various “debt evasion” behaviors. It can effectively protect the legitimate rights and interests of investors and also give the market “peace of mind”.
“It is necessary to establish a system of prevention and control of risks of early identification, early warning, early detection and early elimination, to understand the risks in advance and treat them as soon as possible.” Meng Wei emphasized that for individual emerging risks, pay close attention to interest payments on related bonds. , Monitor and promote the formulation of solutions to protect the rights and legitimate interests of investors.
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Editor in charge: Qi Qiqi
