PRC managers face low restrictions in offshore HY market

Author: Brian Yap | Published: 11 May 2017

PRC private fund managers have been driving investment in PRC-issued offshore high yield bonds because they are not subject to credit rating restrictions imposed by the China Banking Regulatory Commission (CBRC).

A number of private wealth management firms are investing in offshore debt issued by Chinese companies. Some of these bonds are seen as risky as an increasing number of BB or even B-rated issuers from the country are tapping the offshore dollar debt market. 

But, as PRC-based counsel point out, private wealth management firms are not qualified domestic institutional investors (QDIIs), with some of them only regulated by the China Securities Regulatory Commission (CSRC) or the Asset Management Association of China. This means that they are not among entities subject to the CBRC restrictions when it comes to investing in foreign-issued debt.

"The rules generally require QDII-qualified commercial banks and trust companies to invest in offshore bonds rated...



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