Shanghai Yuyuan to Sell Bonds as China Lifts Ban

China ended a 10-month moratorium on the issuance of exchange-traded corporate bonds Tuesday by giving Shanghai Yuyuan Tourist Mart Co. permission to sell 500 million yuan ($73.2 million) worth of the bonds. The five-year bonds will be sold on the Shanghai Stock Exchange on Friday. Exchange-traded bonds are one of three categories of bonds in China's complex corporate-bond market. Such bonds are typically sold by listed companies and supervised by the China Securities Regulatory Commission. The relaxation of restrictions in this particular section of the corporate-debt market comes on the heels of the CSRC's decision last month to resume initial public offerings after a nine-month hiatus. It also reflects Beijing's growing ease with the domestic capital markets' capacity and appetite for supply as the economic recovery gains traction. 'China may want to test the water by initially opening the door to small-sized bond issues,' said Dong Chengjiang, a bond analyst at Shenyin Wanguo Securities. 'The regulator is likely to allow bigger offerings if the market gives a positive response, repeating the pattern of the IPO resumption.' Mr. Dong said he expects local companies to issue between 120 billion yuan and 180 billion yuan worth of exchange-traded bonds this year. Shanghai Yuyuan said it will use the proceeds from the bond issue to repay bank loans and to supplement its working capital. Haitong Securities Co. will be the main underwriter of the deal, it said. The National Development and Reform Commission, China's top economic-planning agency, regulates bonds issued by mostly state-owned enterprises and government agencies for long-term funding needs. The Chinese central bank operates a separate medium-term note program and approves sales of short-term bills. The CSRC imposed its moratorium on stock-exchange corporate-bond issues and IPOs in September as part of its efforts to boost China's equities market. The last exchange-traded bond was a 5.9 billion yuan issue by China Vanke Co., the country's biggest property developer, in September. Before the bond moratorium, nearly 40 companies had gained preliminary regulatory approval for bond issues, with a combined issuance size of about 140 billion yuan. Among them, PetroChina Co., China's largest listed oil and gas producer by capacity, proposed selling 30 billion yuan worth of debt, and China Petroleum & Chemical Corp. planned to issue 20 billion yuan worth of bonds. Wang Ming