Private placement curbs set to raise corporate China's debt risks

Hong Kong

NEW rules to rein in a surge in private share sales by Chinese companies are pushing more cash-strapped firms to borrow instead, bankers and analysts say, adding to a corporate debt burden already at its highest since the global financial crisis.

Private placements in China jumped five-fold from 2013 to US$172 billion in 2016, skirting regulators' controls on initial public offerings (IPOs) and raising concerns that companies were raising too much money for inefficient or speculative purposes. That prompted new rules from the China Securities Regulatory Commission (CSRC) last month limiting the size of such fundraisings, regulating timing and excluding some sectors altogether.