BEIJING -- China's financial-leasing firms and auto-finance companies are being allowed to issue bonds as part of efforts to broaden their fund-raising channels, according to a joint statement from the country's central bank and financial regulator.
China is trying to channel funds to small and medium-size enterprises to help pick up the slack in investment when the government eases its stimulus program.
China's 12 financial-leasing companies had assets totaling 108.1 billion yuan ($15.83 billion) at the end of July, the People's Bank of China said.
It announced the new rules on its Web site through a joint statement with the China Banking Regulatory Commission.
Banks tend to be reluctant to lend to small and midsize firms, which often lack enough assets to put up as collateral.
Financial-leasing institutions help those companies get around this hurdle, because the assets they lease, such as machinery, can serve as collateral.
In addition, China had 10 auto-financing companies with assets totaling 37.8 billion yuan as of July, the People's Bank of China statement said.
Allowing such companies to issue bonds will help the development of auto-financing services and boost domestic demand for cars and trucks, it said.
The rules take effect immediately, according to the joint statement.
Companies should ensure their capital adequacy ratio is no lower than 8% after the issuance of bonds, the statement said.
Leasing companies that want to issue bonds should have registered capital of at least 500 million yuan or the equivalent value in a convertible currency, while auto finance companies should have registered capital of at least 800 million yuan or an equivalent amount, the CBRC said.
Companies also must have been profitable for the previous three years, with a higher profit than the industry average for the most recent year, and a stable profit outlook.
The companies must have adequate risk controls and their non-performing asset ratio for the preceding year must be lower than the industry average, it said.
